Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You have estimated a Keynesian model for Ruston as follows: C = 100+0.9(1-t)Y T=tY=0.3Y M=0.23(1-t)Y I=150 G=200 X=300 Remember that imports (M) are part of

You have estimated a Keynesian model for Ruston as follows: C = 100+0.9(1-t)Y T=tY=0.3Y M=0.23(1-t)Y I=150 G=200 X=300 Remember that imports (M) are part of total consumption spending C and that disposable income is (1-t)Y, where t is the tax rate. 1a)What is the multiplier effect for Ruston? b)What happens to Y, T, M, and C if exports increase by 100? c)Return to the original value for exports. What happens if the propensity to consume out of disposable income falls from 0.9 to 0.8? That is what are the answers to (a) - (c) in this case?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Foundations of Business

Authors: William M. Pride, Robert J. Hughes, Jack R. Kapoor

6th edition

1337386928, 9781337670975 , 978-1337386920

More Books

Students also viewed these Economics questions

Question

How easy the information is to remember

Answered: 1 week ago

Question

The personal characteristics of the sender

Answered: 1 week ago

Question

The quality of the argumentation

Answered: 1 week ago