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The reduced form of a macroeconomic model is given by the following equation: = 1 1 ( + + ) where Y is the national
The reduced form of a macroeconomic model is given by the following equation: = 1 1 ( + + ) where Y is the national income, is the taxes, is the investment, is the government expenditure, 00 is the autonomous consumption. a) (5 p.) Find expressions for the government expenditure multiplier ( ), and the taxation multiplier, . b) (10 p.) Show that if both G and T increase by 1 unit, then the equilibrium value of national income also rises by 1 unit. c) (10 p.) Find expression for the multiplier .
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