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In a Keynesian macroeconomic model = + + = 20 + 0.75d and disposable income is d = (1 ) a. Derive a reduced form
In a Keynesian macroeconomic model = + + = 20 + 0.75d and disposable income is d = (1 ) a. Derive a reduced form equation for equilibrium in terms of , , and . Now suppose that the tax rate is exogenously fixed at 20% ( = 0.2) and government expenditure is fixed at 30, = 30. b. Update the reduced form equation for equilibrium to reflect these values and then determine the comparative static effect of a change in .
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