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The total expenditure in Macroland begins with these initial levels (in billions of dollars); income = 1,000; Consumption = 900; Investment = 200; Government = 300; Net Exports = -100. If the MPC = 0.75 and income increases in increments of 200,

a) Find the equilibrium

b) If full employment requires an income level of 2,000, what (if anything) should the government do? Indicate both the direction of the spending change and the size of spending change?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M938991

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