Calculate the autonomous consumption and mps. suppose you, Ask an Expert

Economics

In a closed economy the consumption function represented by C = 4000 - 4000r + 0.20Y and investment function represented by I = 2400 - 4000r. Where, Y is output and r is real interest rate. Given G = 2000.find out the following:

a. Real interest rate that clears the goods market when Y = 10,000 and Y = 10,200.

b. If G rises to 2400 and Y = 10,000, what will be the real interest rate that clears the goods market.

c. find out the autonomous consumption and MPS.

d. Suppose you introduce a tax element and the resulting new consumption function will C = 4000 - 4000r + 0.20 (Y - T) and T = 2000, what will be the real interest rate that clears the goods market at G = 2000 and Y = 10,000.

e. Determine autonomous investment and marginal propensity to invest.

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Macroeconomics, Economics

Category:- Macroeconomics
Reference No.:- M967782

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