Suppose autonomous consumption is $500, government spending $1,000, panned inves

Q: Suppose autonomous consumption is $500, government spending $1,000, panned inves

Y = C + I + G + (X-M) = GDP Consumption Function: C= a + (MPC)*Y Y = a + (MPC)*Y + I + G + (X-M) Y – (MPC)*Y = a + I + G + (X-M) Y*(1 – MPC) = a + I + G + (X-M) a + I + G + (X-M) = Autonomous E Y = (Autonomous E)/(1-MPC) DY = D(Auto E)/(1-MPC)

ID: 1194839 • Letter: S

Question

Suppose autonomous consumption is $500, government spending $1,000, panned investment is $1,250, and net exports are -$250 and the MPC is 0.8. What is the equilibrium value GDP? Suppose autonomous consumption is $500, government spending $1,000, panned investment is $1,250, and net exports are -$250 and the MPC is 0.8. What is the equilibrium value GDP? Suppose autonomous consumption is $500, government spending $1,000, panned investment is $1,250, and net exports are -$250 and the MPC is 0.8. What is the equilibrium value GDP?

Explanation / Answer

Y = C + I + G + (X-M) = GDP

Consumption Function: C= a + (MPC)*Y

Y = a + (MPC)*Y + I + G + (X-M)

Y – (MPC)*Y = a + I + G + (X-M)

Y*(1 – MPC) = a + I + G + (X-M)

a + I + G + (X-M) = Autonomous E

Y = (Autonomous E)/(1-MPC)

DY = D(Auto E)/(1-MPC)

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Suppose autonomous consumption is $500, government spending $1,000, panned inves

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