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Suppose the economy is characterized by the following behavioral equations: C = c0 + c1YD YD = YminusT I = b0 + b1Y Government spending
Suppose the economy is characterized by the following behavioral equations: C = c0 + c1YD YD = YminusT I = b0 + b1Y Government spending and taxes are constant. Note that investment increases with output. c0 is autonomous consumption, c1 is the propensity to consume, and b0 is business confidence. Part 2 Solve for equilibrium output. Yequals enter your response here. (Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E.g., a subscript can be created with the _ character.) Part 3 What is the value of the spending multiplier? Multiplier = enter your response here. (Properly format your expression using the tools in the palette.) Part 4
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