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Given the equations of the macro model, estimate the AE function, slope of the AE function, equilibrium level of national income and simple multiplier.

The equations of the model are:

C = 50 + 0.7VD T={0.2}Y

1 = 75 X = 50

G = 100 IM = {0A5)Y

a. Calculating the AE function and plot it in a diagram.What is total autonomous expenditure?

b. What is the slope of the AE function?

c. Compute the equilibrium level of national income.

d. Suppose X rises from 50 to 100. How does thisaffect the level of national income?

e. What is the simple multiplier in this model?

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M922130

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