Question
Suppose C=200+45(YT) where C = Consumption; Y=GDP and T=total taxes = 250; G=250 and 1 planned =250 and NX=0 a. Solve for the consumption function.
- Suppose C=200+45(YT) where C = Consumption; Y=GDP and T=total taxes = 250; G=250 and 1planned=250 and NX=0
a. Solve for the consumption function.
b. Solve for the income-expenditure equilibrium.
c. Suppose G increases to 350, what is the multiplier? (Solve for new equilibrium and find multiplier; check your work by using spending multiplier formula.) How does this affect the aggregate demand curve
d. Suppose T decreases to 150, what is the multiplier? (Solve for new equilibrium and find multiplier; check your work by using tax multiplier formula, use the original data, i.e., G=250). How does this affect the aggregate demand curve?
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An Inquiry Into The Nature And Causes Of The Wealth Of Nations
Authors: Adam Smith, R H Campbell
1st Edition
0865970068, 9780865970069
