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 ______.