Suppose the economy of Apple Republic is represented by the following equations:Z = C +|+ GC = 500 + .5YDT= 600|= 300YD = Y - TG = 2000(Enter number only into the boxes)a. Given the above variables, calculate the equilibrium level of output (Y)disposable income (Yp)and consumption (C)Hint: First specify (using the above numbers) the demand equation (Z) for this economy. Second, using the equilibrium condition, equate this expression with Y. Onceyou have done this, solve for the equilibrium level of output (Y). Third, once you get Y, you can T from Y to get Yp. Finally, once you get Yp, you substitute it into theconsumption equation to get consumption (C).b. Now, assume that government spending decreases from 2000 to 1900. What is the new equilibrium level of output (Y)? What is the multiplierfor this economyc. Now, assume that G is still at 2000, but taxes increase from 600 to 700. What is the new equilibrium level of output (Y)? What is the multiplierfor this economyd. Now, assume that G=2000 and T=600, but consumer confidence decreases causing a reduction in autonomous consumption (co) from 500 to 400. What is the newequilibrium level of output (Y)? What is the multiplier for this economy

Given C=500+0.5Yd T=600 I=300 Y0=Y-T G=2000 GDP= C + I + G calculate all the term which are given…

Answered: Suppose the economy of Apple Republic…

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter12: The Partial Equilibrium Competitive Model

Section: Chapter Questions

Problem 12.3P

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