An open economy presents the following data. The intercept of the consumption function is 4700. The marginal propensity to save (MPS) is 0.20. There are no tax collections in this economy. Government expenditure is 10,000. Autonomous investment is 6,000. The marginal propensity to invest is 0.12. Autonomous exports are 5,000. Autonomous imports are 3,000. The marginal propensity to import is 0.1. Using this information, answer the following four parts. Calculate the equilibrium level of GDP. Calculate the multiplier in this economy. Now suppose that the MPS changes to 0.15. Calculate the new multiplier in this economy. Given the change in the MPS to 0.15, calculate the new equilibrium level of GDP

An open economy presents the following data. The intercept of the consumption function is 4700. The marginal propensity to save (MPS) is 0.20. There are no tax collections in this economy. Government expenditure is 10,000. Autonomous investment is 6,000. The marginal propensity to invest is 0.12. Autonomous exports are 5,000. Autonomous imports are 3,000. The marginal propensity to import is 0.1. Using this information, answer the following four parts. Calculate the equilibrium level of GDP. Calculate the multiplier in this economy. Now suppose that the MPS changes to 0.15. Calculate the new multiplier in this economy. Given the change in the MPS to 0.15, calculate the new equilibrium level of GDP

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter8: The Keynesian Model

Section: Chapter Questions

Problem 20SQ

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