Determine the impact on income of a 50 increase in, Ask an Expert

Economics

Fiscal Policy Impact Project
Assume the following open economy
C = 300 + 0.80(Y - 125)
I = 150
G = 250
X =115
M = 125+.05Y

a. Determine (solve for) the equilibrium level of income or GDP (Y).

b. Determine the impact on income of a 50 increase in government spending from 250 to 300.

Y= C, I, G, X, and M
Y = 300 + 0.80Y -100 + 150 + 300 + 115 -125 -.05Y
Y =

c. Using the original data, compute the impact of a 50 decrease in taxes from 125 to 75.

d. If the government seeks to raise income to 3,000, how much should it raise government spending?

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M950643

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