Calculate and interpret the values of the multiplier

Reference no: EM131094909

Assume C0 = 200, I0 = 200, G0 = 100, X0 = 100, M0 = 100, T (taxes)= 100

Marginal propensities: c1 = 0.8, i1 = 0.1, m1 = 0.15

Aggregate Expenditure: E = C0 + c1(Y - T) + I0 + i1Y + G0 + X0 - M0 - m1Y

Calculate aggregate expenditure in equilibrium where E=Y

Calculate and interpret the individual and combined effects of changes to X0 and M0 such that X0 = 150 and M0 = 150 and all other variables remain unchanged.

Also, calculate and interpret the values of the multiplier.

Reference no: EM131094909

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