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Hello,I would like help with this homework problem, especially adding C+I+G 3 . Problems 21-11 Consider an economy described by the following equations: C =
Hello,I would like help with this homework problem, especially adding C+I+G
3 . Problems 21-11 Consider an economy described by the following equations: C = 100+0.75 x (Y T) I 500 50 x r G 125 T 100 where Y is GDP, C is consumption, I is investment, G is government purchases, T is taxes, and r is the interest rate. If the economy were at full employment (that is, at the natural rate of output), GDP would be $2,000. Identify the equation(s) each of the following statements describes. Check that apply. Statement It is an autonomous amount, independent of other factors. It is a function of disposable income. It depends on the interest rate. The marginal propensity to consume in this economy is c 0.7 G T Suppose the central bank's policy is to adjust the money supply to maintain the interest rate at 4%, When the interest rate is 4%, GDP is so r = 4. GDP at an interest rate of is the full-employment level. in gm.'ernment purchases by Assuming no change (Note: Assume that Assuming no change in monetary policy, this change in fiscal policy has no crowding-out effect.) in fiscal policy, in the interest rate by would restore GDP to the full-employment level. would restore GDP to the full-employment level.
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