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Given the following information ($ billions):

Ca = 20

G = 10

I = 15

MPC = 0.8

Y = C + I + G

Find the equilibrium level of income (Y*). Construct an aggregate expenditures model showing this information.
What happens to RGDP if government spending decreases by $5 billion? Provide specific numbers.
Suppose this economy opens up to trade. If exports = $5 and imports = $7, what will be the new equilibrium level of income assuming we are starting at Y* in part (a)?

Econometrics, Economics

  • Category:- Econometrics
  • Reference No.:- M9474101

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