Question
In one country are known the following facts (in billion USD, using abbreviations for variables as usual): Y=C+I+G C=C(Y-T)=125+0,75(Y-T) I=I=100 G=G = 150 T= T
In one country are known the following facts (in billion USD, using abbreviations for variables as usual):
Y=C+I+G
C=C(Y-T)=125+0,75(Y-T)
I=I=100
G=G = 150
T= T = 100
The government decides to purchase airplanes at a total cost of 1 billion.
A) What change will the increase in government purchases cause at all levels of Y?
B) Rest of the variable's values-have not changed. How will the planned expenditure curve shift? Write an equation for the new planned expenditure curve after the change of G.
C) What was the level of Y1 before buying airplanes and afterwards Y2?
D) Find the resulting government purchase's multiplier?
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