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What is the equilibrium level of consumption in this economy? Please answer the following question. Please show full working out/ calculations and justification, explaining the
What is the equilibrium level of consumption in this economy?
Please answer the following question. Please show full working out/ calculations and justification, explaining the economic reasoning used to reach the answer.
Suppose an economy is described by the IS-LM model with the following parameter values. Autonomous consumption is 400, marginal propensity to consume is 0.5,autonomous investment is 200,the sensitivity of investment to output and interest rate are 0.3 and 60, respectively. Taxes are 140,and government spending is 120. The interest rate equals 0.06. What is the equilibrium level of consumption in this economy? Round your answer to the nearest whole number (e.g., if your answer is 100.3,type in 100,and if it is 100.5 or 100.7, submit it as 101)Step by Step Solution
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