Assume you have the following model of the expenditure sector: AD  = C + I + G + NX         C = Co + cYD       YD = Y - TA + TR       TA  = TAo      TR  = TRo                             I = Io                                 G = Go                         NX = NXo  If a change in exports by deltaNX = - 200 is accompanied by a change in consumption by ∆C = - 800, what is the size of the expenditure multiplier?

Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter23: The Aggregate Expenditure Model
Section: Chapter Questions
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Assume you have the following model of the expenditure sector:

AD  = C + I + G + NX        

C = Co + cYD      

YD = Y - TA + TR      

TA  = TAo     

TR  = TRo                            

I = Io                                

G = Go                        

NX = NXo

 If a change in exports by deltaNX = - 200 is accompanied by a change in consumption by ∆C = - 800, what is the size of the expenditure multiplier?

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