What is the change in y in the 3rd round of the multiplier

Reference no: EM13223344

The following is a model of a closed economy with no government.
C = 44 + 0.6YD I = 12

where C = desired consumption expenditure (in billions of $), YD = disposable income (in billions of $), and I = desired investment expenditure (in billions of $).

m) At equilibrium, what do the injections and the withdrawals in this economy equal?
n) Give two reasons why investment would change from I = 12 to I = 18.
o) What are the new equilibrium levels of Y, C, S, and YD if investment changed from I = 12 to I = 18?
p) What is the size of the (simple) multiplier?
q) What is the change in Y in the 3rd round of the multiplier effect as a result of the change in investment in part n?

Reference no: EM13223344

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