1.1. The following mathematical equations reflect the performance of the economy and inventory changes play a very important role in the SKM. Consider a simple Keynesian model where C = 540 +0.7Y and != 360+ 0.2Y the country is considered closed economy, and without the government. 1.1.1. Determine the equilibrium income level of the country. ANSWER: 1.1.2. Suppose that in this country last year's aggregate demand determines this year's production. If autonomous investment increases from 360 to 430 then what will be the national income in three years' time? ANSWER: 1.1.3. Given the solution in 1.1.2. briefly explain the type of effect the increase in autonomous investment had on national income.
1.1. The following mathematical equations reflect the performance of the economy and inventory changes play a very important role in the SKM. Consider a simple Keynesian model where C = 540 +0.7Y and != 360+ 0.2Y the country is considered closed economy, and without the government. 1.1.1. Determine the equilibrium income level of the country. ANSWER: 1.1.2. Suppose that in this country last year's aggregate demand determines this year's production. If autonomous investment increases from 360 to 430 then what will be the national income in three years' time? ANSWER: 1.1.3. Given the solution in 1.1.2. briefly explain the type of effect the increase in autonomous investment had on national income.
Chapter19: The Keynesian Model In Action
Section: Chapter Questions
Problem 4SQ
Related questions
Question
100%
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning