Assume a closed economy with a GDP (Y) of 6,000. Consumption (C) is given by the equation C = 600+ 0.6(Y-T). Investment (I) is given by the equation I = 2,000- 100i, where i is the nominal rate of interest (in percent). Taxes (T) are 500 and government spending (G) is also 500. (a) What is the autonomous consumption? (b) What is the autonomous spending? (c) What is the marginal propensity to consume? (d) Graph the Aggregate Demand. (e) What is the equilibrium value of i? (f) What is the equilibrium value of C?

Assume a closed economy with a GDP (Y) of 6,000. Consumption (C) is given by the equation C = 600+ 0.6(Y-T). Investment (I) is given by the equation I = 2,000- 100i, where i is the nominal rate of interest (in percent). Taxes (T) are 500 and government spending (G) is also 500. (a) What is the autonomous consumption? (b) What is the autonomous spending? (c) What is the marginal propensity to consume? (d) Graph the Aggregate Demand. (e) What is the equilibrium value of i? (f) What is the equilibrium value of C?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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