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Unformatted text preview: 1/.4 + .25 1/.65 = 1.54 or just remember that the spending multiplier = 1/1slope of AE so 1/1  .35 = 1/.65 = 1.54 m. T = .25Y T = .25 (2000) = 500 n. G = 300 T = 500 so the govt.budget is in surplus o. NE = X – Im NE = 500  .25(2000) = 500 – 500 = 0 p. Answer is d. Injections = Leakages in equilibrium so I + G + X = S + T + Im Check it out numerically by plugging in the numbers q. Answer is c. You want to increase Y by 1000 from 2000 to 3000. The spending multiplier is 1.54 So 1000 = 1.54 x change in G 1000/1.54 = change in G 649.35 = change in G r. The tax multiplier is MPC/1MPC (1t) + im or  .8/.65 or –1.23 or, simply, MPC/ 1 slope of AE...
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 Spring '10
 HICKENBOTTOM
 Microeconomics, Trigraph, AE

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