Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

HW2 PLAESE SEND THE SOLUTION Question: Assume the economy has the following Consumption function: C = 100+ 0.75Yd Investment: 1 = 100 Government spending: G

image text in transcribed

HW2 PLAESE SEND THE SOLUTION Question: Assume the economy has the following Consumption function: C = 100+ 0.75Yd Investment: 1 = 100 Government spending: G = 100 Net taxes: T = -25 + 0.2Y Find: a) Find the value of multiplier. What are the factors affect the multiplier. b) Find equilibrium level of income c) Find the effect of an increase in tax by $100 on equilibrium income. d) If Government spending increased from 100 to 200. Find the new equilibrium income. e) If investment change by $ 200, what is the new equilibrium income. f) If tax rate increases from 0.2 to 0.4 prove the value of multiplier will decrease. g) Graph the equilibrium in in b, c, d, e

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Economics A Problem-Solving Approach

Authors: Luke M. Froeb, Brain T. Mccann

2nd Edition

B00BTM8FK0

More Books

Students also viewed these Economics questions