Employment equilibrium level

Reference no: EM1369991

Suppose that in 2012, the following prevails in the Republic of Askil:
Y = 8,000
C = 6,000
G = 0
T = 0
S = 2,000
I (planned) = 1,750
Assume that households consume 75% of their income and save 25% of their income. That is C =.75Yd and S = .25Yd. a.Is the economy of Askil in equilibrium? What is likely to happen in the coming months?
b.If 8,000 is full employment equilibrium level of Y, what fiscal policy would you recommend?
c.If full employment GDP is 6,500, what fiscal policy would you recommend?
d.Determine a level of C, G, I, and T that would produce equilibrium of 7,000.
e.Assume the government spends 200 and increases taxes by 200. Determine the impact on GDP.

Reference no: EM1369991

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