Please no written by hand and no emage Consider a small economy that is closed to trade, so its net exports are equal to zero. Suppose that the economy has the following consumption function, where C is consumption, Y is real GDP, I is investment, G is government purchases, and T stands for net taxes: C=40+0.5*(Y-T) Suppose G= 165 billion, I=50 billion, and T=10 billion. Given the consumption function and the fact that for a closed economy total expenditure can be calculated as Y=C+I+GY=C+I+G, the equilibrium output level is equal to _____ billion. Suppose the government purchases are increased by $100 billion. The new equilibrium level of output will be equal to _____ billion. Based on the effect of the change in government purchases on equilibrium output, you can tell that this economy's spending multiplier is equal to _____.
Please no written by hand and no emage
Consider a small economy that is closed to trade, so its net exports are equal to zero. Suppose that the economy has the following consumption function, where C is consumption, Y is real GDP, I is investment, G is government purchases, and T stands for net taxes:
C=40+0.5*(Y-T)
Suppose G= 165 billion, I=50 billion, and T=10 billion.
Given the consumption function and the fact that for a closed economy total expenditure can be calculated as Y=C+I+GY=C+I+G, the equilibrium output level is equal to _____ billion.
Suppose the government purchases are increased by $100 billion. The new equilibrium level of output will be equal to _____ billion.
Based on the effect of the change in government purchases on equilibrium output, you can tell that this economy's spending multiplier is equal to _____.
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