Business, 15.04.2020 04:14 sharonfeng3241

Assume that the consumption schedule for a private open economy is such thatconsumption C = 50 + 0.8 Y. Assume further that planned investment Ig and net exports Xn are independent of the level of real GDP and constant at Ig = 30 and Xn = 10. Recallalso that, in equilibrium, the real output produced (Y) is equal to aggregate expenditures:.
Y = C + Ig + Xn.
a. Calculate the equilibrium level of income or real GDP for this economy.
b. What happens to equilibrium Y if Ig changes to 10? What does this outcome revealabout the size of the multiplier?

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Assume that the consumption schedule for a private open economy is such thatconsumption C = 50 + 0.8...

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