Consider a simple keynesian income-spending model of an, Ask an Expert

Economics

Consider a simple Keynesian income-spending model of an economy described by the following equations

C = 210 + 0.75Yd
I= 300
G= 425
TR= 120
T= 100
M = 0.15Y
X= 220

(a) find out the equilibrium level of income. Sketch this equilibrium position using a two-dimensional graph.

(b) Suppose the government reduces public expenditure by 50. Estimate the change in the equilibrium level of income? What is the new equilibrium level of income?

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M959239

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