Consider an economy where the various components of expenditure follow these equations: C = 10 + 0.8Yd I = 500 G = 100 X = 300 M = 0.1Y T = 0.1Y c. Calculate the equilibrium level of GDP in this economy, highlighting what are the values of the Keynesian multiplier and the autonomous components of expenditure.

MACROECONOMICS
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ISBN:9781337794985
Author:Baumol
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Chapter11: Managing Aggregate Demand: Fiscal Policy
Section11.B: Algebraic Treatment Of Taxes And Fiscal Policy
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Consider an economy where the various components of expenditure follow these equations:
C = 10 + 0.8Yd
I = 500
G = 100
X = 300
М — 0.1Y
T = 0.1Y
c. Calculate the equilibrium level of GDP in this economy, highlighting what are the values of
the Keynesian multiplier and the autonomous components of expenditure.
Transcribed Image Text:Consider an economy where the various components of expenditure follow these equations: C = 10 + 0.8Yd I = 500 G = 100 X = 300 М — 0.1Y T = 0.1Y c. Calculate the equilibrium level of GDP in this economy, highlighting what are the values of the Keynesian multiplier and the autonomous components of expenditure.
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