Question

Assume the following set of equations describe the economy of Agriland: Consumption = $100 billion +...

Assume the following set of equations describe the economy of Agriland:

Consumption = $100 billion + .6YD YD refers to disposable income

Investment = $90 billion

Government spending = $70 billion

Taxes = .25Y

Exports = $65 billion

Imports = 0.1Y

  1. Calculate the equilibrium level of output for Agriland? (Show formula and calculations)
  2. Calculate the multiplier for Agriland. (Show formula and calculations)
  3. What is the impact on the equilibrium level of output in Agriland of an increase in government spending of $80 billion. (Show formula and calculations)
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