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Suppose that we are in an economy with international trade, the government, domestic consumption, and investment. The government retains a tax rate of 10%. Suppose
Suppose that we are in an economy with international trade, the government, domestic consumption, and investment. The government retains a tax rate of 10%. Suppose that we observe this economy at two levels of national income (Y) ceteris paribus: (i) Y = 1,000 and (ii) Y = 1,800. The amounts for each of these desired expenditure categories at each of these levels of Y are given by: At Y = 1,000: Consumption = 1,000 Government Spending = 550 Investment = 150 Imports = 100 Exports = 150 At Y = 1,800: Consumption = 1,560 Government Spending = 550 Investment = 270 Imports = 180 Exports = 150 Based upon this data, answer the following questions. We will keep referring to four categories these are Consumption (C), Investment (I), Government Spending (G), and Net Exports (NX)
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