Question
I was given the following information on an assignment: Using the information below answer the following questions. IfAD is....... Y =5 (Ao - P/3) and
I was given the following information on an assignment:
Using the information below answer the following questions.
IfAD is.......Y =5 (Ao - P/3)
and
ASis .....Y =1,000 ;for P> 600
Ao = Co - mpcTo + Io + Go + Xo - Mo = 600
mpc = 0.8
I have to answer the following underlined question using the above information:
Part 1: The Equilibrium price level(Pe1):
Part 2: The Equilibrium National Income (Ye1):
SupposeGovernment Spending increases by 215
Given the change in government spending:
Part 3: What is the new equilibrium price level (Pe2):
Part 4:What is the new equilibrium national income (Ye2):
Starting again at initial equilibrium, suppose now lump sum taxes are increasedby105
Part 5:What is the new equilibrium price level (Pe3):
Part 6:What is the new equilibrium national income (Ye3):
How do I answer these questions?
this was all the information given in the question, that's why I'm having a hard time with it.
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