Consider a small macroeconomy located near the South Pacific Ocean where the current interest rate is 15 percent and the potential level of real GDP equal to $2.7 billion. Consumers spending behavior is described by the equation: C = 175 + 0.8DI, while firm's investment spending behavior is described by the equation: I = 60 + 0.25Y-750r. Trade is allowed and currently, total exports is fixed at $150 million while total imports is described by the equation: IM 320 +0.1Y. The government's spending is fixed at $840 million and net taxes is described by the equation: T = 50 + 0.25Y. (Question 1 of 6) = What is the current equilibrium level of GDP (in millions of dollars)? (report your answer at 3 decimal places)
Consider a small macroeconomy located near the South Pacific Ocean where the current interest rate is 15 percent and the potential level of real GDP equal to $2.7 billion. Consumers spending behavior is described by the equation: C = 175 + 0.8DI, while firm's investment spending behavior is described by the equation: I = 60 + 0.25Y-750r. Trade is allowed and currently, total exports is fixed at $150 million while total imports is described by the equation: IM 320 +0.1Y. The government's spending is fixed at $840 million and net taxes is described by the equation: T = 50 + 0.25Y. (Question 1 of 6) = What is the current equilibrium level of GDP (in millions of dollars)? (report your answer at 3 decimal places)
Chapter17: Capital And Time
Section: Chapter Questions
Problem 17.2P
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option:
a contractionary
a decrease in government spending
A decrease in taxes
an expansionary
an increase in government spending
an increase in taxes
inflation
targeting a higher federal funds rate
targeting a lower federal funds rate
the purchasing of government securities in the open market
the sale of government securities in the open market
unemployment
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