1. Consider an economy with the following situation:C = 50 +0.8 Yd =100;T= 100G =150a. Solve for Y, C, Sb. How much is investment and government multiplier? Taxmultiplier?c. Suppose full employment income is 900. Is this an inflationary ordeflationary gap? How much is the gap?d. To eliminate the gap, the government decides to change itsexpenditure G. By how much should G change? Show that incomeAE or Ye is now 900 after the change in G.e. If the government decides to adopt balanced budget spending, byhow much G and T will change to reach full employment output orincome?

Consider an economy with the following situation: C = 50 +0.8 YdI =100;T = 100 G =150 a. Solve for Y, C, S b. How much is investment and government multiplier? Tax multiplier? c. Suppose full employment income is 900. Is this an inflationary or deflationary gap? How much is the gap?

Consider an economy with the following situation: C = 50 +0.8 YdI =100;T = 100 G =150 a. Solve for Y, C, S b. How much is investment and government multiplier? Tax multiplier? c. Suppose full employment income is 900. Is this an inflationary or deflationary gap? How much is the gap?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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