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Given the multiplier model diagram, determine the value of equilibrium income and the impact of increase in government spending on income.

Consider the following multipliyer model digram:

2108_multipliyer model digram.jpg

a.What is the value of equilibrium income?

b.Demonstrate graphiocally and describe verbally the impact on equilibrium income of an increase in government spending of 100.

c. Elucidate why the change in equilibrium salary exceeds the change in government expenditures in your answer.

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M920553

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