MACROECONOMICS
14th Edition
ISBN: 9781337794985
Author: Baumol
Publisher: CENGAGE L
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Question
Chapter 9.A, Problem 5TY
a)
To determine
To describe: The equilibrium level of GDP.
b)
To determine
To describe: The saving at equilibrium level of GDP is find out.
c)
To determine
To describe: After increase in net export, the equilibrium level of GDP and the amount of saving.
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Consumption function for a country; Let C = 100 + 0.75Y. Planned investments 1 = 200. In this case
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Consider the imaginary small country of Kootenay. Assume that Kootenay is closed to trade, so that its net exports are equal to zero. Suppose that the economy is described by the following consumption function, where C is consumption, Y is income (real GDP), IP is planned investment, G is government purchases, and T is taxes:
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