What does the outcome reveal about the size of multiplier

Reference no: EM13200652

(Advanced Analysis) Assume that the consumption schedule for a private open economy is such that consumption is as follows:
C = 50 + 0.9 Y

Assume further that planned investment Ig and net exports Xn are independent of the level of real GDP and constant at:
Ig = 30
Xn = 10
Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate expenditures: Y = C + Ig + Xn.

a. What is the equilibrium level of income or real GDP for this economy? $

b. What happens to equilibrium Y if Ig changes to 10 ? Y = $

What does this outcome reveal about the size of the multiplier?

Reference no: EM13200652

Questions Cloud

The type of the wireless internet service : Wireless high speed internet is provided for free in the airport of the city of communityville. At first, only a few people use the service. What type a good is this and why.

Where is the economy operating relative to potential gdp : What is the relationship between potential output and the natural rate of unemployment If the economy currently has a frictional unemployment rate of 2 percent, structural unemployment of 2 percent, seasonal unemployment of 0.5 percent

Childern learning to play percussion instrument : Define how you might contribute a lesson given to a group of 7 year old childern learning to play percussion instrument.

Role of servant to their constituents : In the role of servant to their constituents, members of congress:

What does the outcome reveal about the size of multiplier : (Advanced Analysis) Assume that the consumption schedule for a private open economy is such that consumption is as follows: C = 50 + 0.9 Y Assume further that planned investment Ig and net exports Xn are independent of the level of real GDP and const..

Leadership is best defined : Leadership is best defined as _____.

Role of network administrator for an accounting firm : Assume the role of Network Administrator for an accounting firm with 38 fulltime employees, Rogers and Rogers Certified Accountants. Utilize the following information to outline a new network security design for this firm in no less than 400 words

Condition in which a currency become stronger : When an economist says that a currency has become stronger, he or she means that it will buy less of foreign goods. it can be exchanged for more of a foreign currency.

What are the sizes of the mpc and mps : Assuming the level of investment is $16 billion and independent of the level of total output, complete the following table and determine the equilibrium levels of output and employment in this private closed economy. What are the sizes of the MPC ..

User Account

All Pages