Problem
Calculate the equilibrium aggregate expenditure and equilibrium income of an open economy with the following expenditure accounts:
C0 = 200, I0 = 200, G0 = 100, X0 = 100, M0 = 100, TP = 0, c1 = 0.8, i1 = 0.1, m1 = 0.15
where
E= aggregate expenditure
C0= autonomous consumption expenditure
I0= autonomous investment expenditure
G0= autonomous government expenditure
X0= autonomous export spending
M0= autonomous import spending
TP= personal taxes
c1= marginal propensity to consume
i1=marginal propensity to invest
m1= marginal propensity to import
1. level Calculate the equilibrium of income/ aggregate expenditures.
2. Assuming M = 200, calculate the new equilibrium and the multiplier.
3. Assuming now that TP = 200, calculate the new equilibrium level.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.