Business, 19.12.2019 02:31, kayleerichards666
Consider planned aggregate expenditure model from question 1 but taxes are proportional to income: so that total taxes paid are the tax rate multiplied by output, ty. assume: planned investment, i = $50 billion; government spending g = $50 billion; the tax rate is t =0.25; the consumption function, c= $100 billion + 0.80((1- t)y).
a. what is the equilibrium level of output?
b. if output in the economy started at 750 billion, what would happen to inventories and output?
c. at the equilibrium level of output: what are total consumption and savings?
d. if government spending increased to $75 billion, what would be the new level of equilibrium output? how has your answer changed from 1e?
Answers: 3
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Consider planned aggregate expenditure model from question 1 but taxes are proportional to income:...
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