Take a shot, what do you think:
Hints:
Y=C+I+G+(X-M),
S+T=I+G and since T=G, S=I. So first calculate S (Savings)
Hint2: whatever you don't consume out of disposible income (di) is savings, so S= -200 + .2di
An economy has the follwoing comsumption function: C= 200+ 0.8di
The government budget is balanced with government purchases and taxes both fixed at $100. Net exports are $100. Investments $600. Find the equilibrium GDP.
What is the multiplier for this economy? If G rises by $100 what happens to Y? What happens to Y if both G and T rise by $100 at the same time?
3 answers
ten
How to find the multiplier? I've got the equilibrium GDP, but I can't find anything about the multiplier.
1 answer