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Determine the value of the multiplier of this economy

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Reference no: EM131445383

Income Determination

The following information describes a hypothetical economy (assume all numbers are in billions, if necessary).

C = 100 + 0.75 DI Ig = 875 G = 925 Xn = -150

Please answer the following questions:

1. What is the value of the MPC of this economy? Explain.

2. Determine the value of the multiplier of this economy.

3. Determine the value of the equilibrium GDP (Y) in this economy.

4. What is the level of consumption in the economy?

5. What is savings in the economy?

6. What will be the effect on equilibrium GDP (Y) and consumption (C) if government spending (G) increases by 50?

Reference no: EM131445383

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