Consider economy T described by the parameters below: C=1500+0.6Y I = 1200 G=2500 X =500 M = 400 T = 1000 a. Identify the marginal propensity to consume (MPC) in T. b. What will be the value of the equilibrium GDP in economy T? Calculate the value of the multiplier for economy T.

Consider economy T described by the parameters below: C=1500+0.6Y I = 1200 G=2500 X =500 M = 400 T = 1000 a. Identify the marginal propensity to consume (MPC) in T. b. What will be the value of the equilibrium GDP in economy T? Calculate the value of the multiplier for economy T.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section11.B: Algebraic Treatment Of Taxes And Fiscal Policy

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Question

1) Consider economy T described by the parameters below:

C=1500+0.6Y

I = 1200

G=2500

X =500

M = 400

T = 1000

a. Identify the marginal propensity to consume (MPC) in T.

b. What will be the value of the equilibrium GDP in economy T?

Calculate the value of the multiplier for economy T.

Definition Video Definition Overall monetary value of all the complete or final services and goods that a country can produce within its domestic boundaries in a specific period. Video

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