Reference no: EM132405674
For an economy described by the following equations:
C = 1,800 + 0.6 (Y - T)
I p = 900
G = 1,500
NX = 100
T = 1,500
Y* = 9,000
Assume that the multiplier for this economy is 2.5.
Find the effect on short-run equilibrium output of:
a. An increase in government purchases from 1,500 to 1,600.
Instruction: Enter your response as an integer value.
Short-run equilibrium output will increase to ______.
b. A decrease in tax collections from 1,500 to 1,400 (leaving government purchases at their original value).
Instruction: Enter your response as an integer value.
Short-run equilibrium output will increase to ______.
c. A decrease in planned investment spending from 900 to 800.
Instruction: Enter your response as an integer value.
Short-run equilibrium output will decrease to ______.