Multiplier Model
C=300+0.5Yd T=1000 I=200 G=2000
a. Calculate the equilibrium level of GDP, and demonstrate on a multipier model graph
b. the government wants to adopt a fiscal stimulus, but is worried about raising the budget deficit, so, it decided to raise expenditure and taxes by $200 each, what will happen to equilibrium GDP? Creat a new multiplier model graph and show separately the effects of the change in G and the change in T on the same graph, as well as the total effect on Ye.