Suppose that the German taxes and real imports do not depend on German real disposable income. Autonomous real consumption is €500 billion, investment spending is €250 billion, lump-sum taxes (taxes that do not depend on real income) is €100 billion, German government spending is €100 billion, real net exports are €0 billion, and the German Marginal Propensity to Consume is 0.5. What is the value of the equilibrium German real GDP, Y*? €1,600 billion. €1,000 billion. €800 billion. €850 billion.
Macroeconomics
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