An economy with NX = 20 - .1Yhas G = 30and a direct tax of 25%. A stock market crash shatters confidence. Households decrease consumption from C = 20 + .8YDto C = 10 + .8YDand firms lower investment from | = 30to | = 20. Provide diagrams and complete the table with numbers. a. Provide a pair of diagrams to show how the crash affects AE Aggregate Expenditure and NS National Savings. Denote GĠDP before the crash as yo and after the crash as y1. b. On the same diagrams illustrate how the equilibrium would be change if the government responded by increasing spending from G = 30to G = 50.Show this as equilibrium y2.

An economy with NX = 20 - .1Yhas G = 30and a direct tax of 25%. A stock market crash shatters confidence. Households decrease consumption from C = 20 + .8YDto C = 10 + .8YDand firms lower investment from | = 30to | = 20. Provide diagrams and complete the table with numbers. a. Provide a pair of diagrams to show how the crash affects AE Aggregate Expenditure and NS National Savings. Denote GĠDP before the crash as yo and after the crash as y1. b. On the same diagrams illustrate how the equilibrium would be change if the government responded by increasing spending from G = 30to G = 50.Show this as equilibrium y2.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section: Chapter Questions

Problem 6TY

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I'm doing some practice questions, theyre all true or false. yall will probably be getting more from me seeing as how they are all true or false and that makes it harder for me. the question is true or false: If the MPC is .98 and GOVT spending increases by $10 AD will increase by $450. Idk how to solve for this with so little information. my equation I would have used for this is: deltaY*= K x deltaG (delta meaning change, dont have that on my computer keyboard) to solve for K= 1/ (1-MPC) I plugged in 10= 50 x deltaG and got 20. that cant be right. was i supposed to put 450 in place of deltaY*?
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