Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 34, Problem 2.2P

Subpart (a):

To determine

To determine the equilibrium income in Country H, the government deficit and the current account balance.

Subpart (b):

To determine

To determine the equilibrium income when the government spending increases and the impact on imports based on the multiplier.

Subpart (c):

To determine

To determine the impact of an import quota on multiplier.

Subpart (d):

To determine

To determine how to attain the current account balance.

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Calculate the missing values in the table below given that the Aggregate Consumption Function for a country is equal toC= 150 + 0.75Y and planned investment is fixed at 300. Aggregate Output (Income) (Y) Aggregate Consumption Investment (C) Unplanned Inventory Change (Y-AE) Planned Planned Aggregate Expenditure (AE) Equilibrium? (1) 1,500 300 1,800 300 2,100 300 2,400 300 2,700 300 What is likely to happen to aggregate output if the economy produces above the equilibrium level? How much is aggregate saving at the equilibrium level? Calculate the multiplier. Calculate the new equilibrium if Planned Investment increased by $50M.
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