Using keynesian cross model find the equilibrium value of

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Reference no: EM13389764

Consider the following simple model of a closed economy:

E = C + I + G

C = 200 +0.75 (Y - T)

I = 500; G = 300; T = 200

a. Determine the autonomous expenditure for this economy?

b. Using the Keynesian Cross model, what is the equilibrium value of real aggregate income (Y) for this simple economy?

c. What is the equilibrium value of aggregate income if government purchases (G) are increased from 300 to 500?

d. What is the equilibrium value of aggregate income if income taxes (T) are reduced from 200 to 100?

Reference no: EM13389764

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