The following equations describe an economy: Y = C + I + G + X – M [where X=exports, M=imports] C = 150 + 0.7*(Y - T) T = 30 I = 300 G = 60 X = 140 M = 100 + 0.2*(Y - T) Which of the following statement is true? The value of the government spending multiplier is 3.33. If exports increase by 10, equilibrium Y will increase by 20. If government spending increases by 40, equilibrium Y will increase by 333. Without any changes, the equilibrium level of Y is 2167.
The following equations describe an economy: Y = C + I + G + X – M [where X=exports, M=imports] C = 150 + 0.7*(Y - T) T = 30 I = 300 G = 60 X = 140 M = 100 + 0.2*(Y - T) Which of the following statement is true? The value of the government spending multiplier is 3.33. If exports increase by 10, equilibrium Y will increase by 20. If government spending increases by 40, equilibrium Y will increase by 333. Without any changes, the equilibrium level of Y is 2167.
Chapter9: The Keynesian Model In Action
Section: Chapter Questions
Problem 18SQ
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The following equations describe an economy:
Y = C + I + G + X – M [where X=exports, M=imports]
C = 150 + 0.7*(Y - T)
T = 30
I = 300
G = 60
X = 140
M = 100 + 0.2*(Y - T)
Which of the following statement is true?
- The value of the government spending multiplier is 3.33.
- If exports increase by 10, equilibrium Y will increase by 20.
- If government spending increases by 40, equilibrium Y will increase by 333.
- Without any changes, the equilibrium level of Y is 2167.
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