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ANSWER BOTH QUESTIONS Assume the following behavioral equations for a macroeconomy: 1. C = 200 +...
ANSWER BOTH QUESTIONS
Assume the following behavioral equations for a macroeconomy:
1. C = 200 + .8Yd , I = 200, T = 200 and G = 500
(a) Calculate the equilibrium level of output.
(b) Given the information, calculate the level of consumption that occurs at the equilibrium level of income.
(c) Suppose Taxes increase by 100. Calculate the new equilibrium level of income.
2. Assume that the government spending multiplier is equal to 5. Calculate the tax multiplier from this information.
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