C = 160 + 0.7YD, T= 100, I= 150, G= 150, NX = 100 – 0.1Y. a. What is disposable income (YD)? b. What is equilibrium GDP (Y)? What is consumption spending at the equilibrium (C)? d. What is the value of multiplier? e. If government spending increases by 100 units how much does equilibrium income change? f. If government increases both taxes and government spending by 100 units how much does equilibrium income change? g. If this was a closed economy (NX=0), what would be the value of multiplier? Compare with the value you obtained previously for the open economy, and comment on why they are different.

C = 160 + 0.7YD, T= 100, I= 150, G= 150, NX = 100 – 0.1Y. a. What is disposable income (YD)? b. What is equilibrium GDP (Y)? What is consumption spending at the equilibrium (C)? d. What is the value of multiplier? e. If government spending increases by 100 units how much does equilibrium income change? f. If government increases both taxes and government spending by 100 units how much does equilibrium income change? g. If this was a closed economy (NX=0), what would be the value of multiplier? Compare with the value you obtained previously for the open economy, and comment on why they are different.

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter19: The Keynesian Model In Action

Section: Chapter Questions

Problem 5SQP

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