Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
The following data are for the economy of Moksha.
C | = | 30 + 0.6Y | G | = | 150 | |
I | = | 60 | XN | = | 50 − 0.1Y |
a. Calculate equilibrium
Equilibrium GDP is $ .
b. Calculate the multiplier.Round your answer to 2 decimal places.
The multiplier is .
c. If the tax function is T = 20 + 0.2Y, the size of the budget is $ . Round your answer to 1 decimal place.
d. Now, change government spending, by the size of the surplus, or deficit, in an attempt to balance the budget. What will be the new equilibrium income? Round your answer to 1 decimal place.
New equilibrium GDP is $ .
e. At the new equilibrium there is a budget os $ . Round your answer to 2 decimal places.
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