Compute equilibrium level of income or real gdp for economy, Microeconomics

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Compute equilibrium level of income or real gdp for economy

Assume that the consumption schedule for a private open economy is such that consumption C = 50 + 0.8Y. Assume further that planned investment Ig and net exports Xn are independent of the level of real GDP and constant at Ig = 30 and Xn = 10. Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate expenditures: Y = C + Ig+ Xn.

a. Calculate the equilibrium level of income or real GDP for this economy.

b. What happens to equilibrium Y if Ig changes to 10? What does this outcome reveal about the size of the multiplier?

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Microeconomics: Compute equilibrium level of income or real gdp for economy

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Microeconomics: Compute equilibrium level of income or real gdp for economy

Reference No:- TGS070074

Have a Question? (oR Write a Review)

Recent Questions Asked Microeconomics

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Request for Solution File

Ask an Expert for Answer!!

Microeconomics: Compute equilibrium level of income or real gdp for economy

Reference No:- TGS070074

Recent Questions Asked Microeconomics

Q : List the sevenbasic parts of a speech

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