The consumption function is given by: C = 200+0.75 (Y-T). The investment function is I = 200-25r. G =100 T=100 1. What is the IS equation 2. Suppose that the government purchases (G) raised from 100 to 150. How much does the IS Curve shift? What are the new equilibrium interest r and level of income, y? If there is no crowding out effect, what is the full multiplier effect of the change in G?
The consumption function is given by: C = 200+0.75 (Y-T). The investment function is I = 200-25r. G =100 T=100 1. What is the IS equation 2. Suppose that the government purchases (G) raised from 100 to 150. How much does the IS Curve shift? What are the new equilibrium interest r and level of income, y? If there is no crowding out effect, what is the full multiplier effect of the change in G?
Chapter19: The Keynesian Model In Action
Section: Chapter Questions
Problem 5SQP
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The consumption function is given by:
C = 200+0.75 (Y-T). The investment function is
I = 200-25r.
G =100 T=100
1. What is the IS equation
2. Suppose that the government purchases (G) raised from 100 to 150. How much does the IS Curve shift? What are the new equilibrium interest r and level of income, y? If there is no crowding out effect, what is the full multiplier effect of the change in G?
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