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Assume the following open economy




Assume the following open economy;C = 300 + 0.80(Y - 125);I = 150;G = 250;X =115;M = 125+.05Y;a. Determine (solve for) the equilibrium level of income or GDP (Y).;b. Determine the impact on income of a 50 increase in government spending from 250 to 300.;c. Using the original data, compute the impact of a 50 decrease in taxes from 125 to 75.;d. If the government seeks to raise income to 3,000, how much should it raise government spending?


Paper#21376 | Written in 18-Jul-2015

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