Reference no: EM131405632
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
- Calculate the equilibrium level of income/ aggregate expenditures.
- Assuming M = 200, calculate the new equilibrium and the multiplier.
- Assuming now that TP = 200, calculate the new equilibrium level. Hint:
- E = C0 + c1(Y - T) + I0 + i1Y + G0 + X0 - M0 - m1Y
- In equilibrium Y=EPost your spreadsheet as an attachment to the drop box titled Measurements Exercise. APA formatting is not necessary except when resources required citation.
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