Answer to Question #37198 in Macroeconomics for Adam

Question #37198
Consider a mythical economy. Investment spending is $6000, government spending on goods & services is $3000, and net exports are -$600. Taxes and consumption spending are given by the following two expressions: T = $3,000 + (1/6)Y and C = $9,000 + (4/5)D.I. A. Find the equilibrium level of GDP. B. At equilibrium, what is the value of the government budget deficit (and which is it, deficit or surplus)? C. Suppose I is increased TO $7500. Find the new equilibrium GDP and the value of the multiplier effect for the change in I. D. Ignore part C (i.e.,go back to the original level of I & Y in part A). Suppose potential GDP is $37,800. i) Using G as a fiscal policy tool, by how much (and increase or decrease) should G be changed to close the gap? (ii) Instead of using G, use fixed T as a fiscal policy tool. By how much (and increase or decrease) should T be changed to close the gap?
Expert's answer
Unfortunately, your question requires a lot of work and cannot be done for free. Please submit it with all requirements as an assignment to our control panel and we'll assist you.

Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!


No comments. Be first!

Leave a comment

Ask Your question

New on Blog