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Determine the equilibrium values of national income

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Reference no: EM13876673

Consider a close economy with the following consumption and investment functions:
C = 250 + 0.67Y I = 150 + 0.07Y
Assume the government expenditure G0 is 80.

(a) Write the model in matrix form and determine the equilibrium values of national income, consumption, and investment.

(b) From the matrix of coefficients, determine the model's multiplier.

(c) Assume the government expenditure changes to 90. Determine the new equilibrium values of Y, C and I .

Reference no: EM13876673

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