6.25 points For an economy described by the following equations: =1,800 + 0.6 (Y

Question

6.25 points For an economy described by the following equations: =1,800 + 0.6 (Y-T) 900 = 1,500 100 = 1,500 9,000 NX Assume that the multiplier for this economy is 2.5. Find the effect on short-run equilibrium output of a. An increase in government purchases from 1,500 to 1,600. Instruction: Enter your response as an integer value Short-run equilibrium output will (Click to select) to b. A decrease in tax collections from 1,500 to 1,400 (leaving government purchases at their original value) Instruction: Enter your response as an integer value Short-run equilibrium output will (Click to select to c. A decrease in planned investment spending from 900 to 800. Instruction: Enter your response as an integer value. Short-run equilibium output will (Cick to selechto aRook & Resources

Explanation / Answer

Answer:- Increase in Government purchase from 1500 to 1600

PAE =C+Ip+G+NX = 1800+0.6(Y-1500)+900+1600+100

PAE =3500+0.6Y

For Short run equilibrium

                Y=PAE

Y=3500+0.6Y

Y=8750

Answer:- A decrease in tax collection

PAE =C+Ip+G+NX = 1800+0.6(Y-1400)+900+1600+100

PAE =3460+0.6Y

For Short run equilibrium

                Y=PAE

Y=3460+0.6Y

Y=8650

Answer:- A decrease in planned investment spending

PAE =C+Ip+G+NX = 1800+0.6(Y-1500)+900+1500+100

PAE =3300+0.6Y

For Short run equilibrium

                Y=PAE

Y=3300+0.6Y

Y=8250

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