ECO100Assign10 - James E Pesando Economics 100...

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James E. Pesando Economics 100 Assignment #10 National Income and The Multiplier 1. In a particular economy, the following relationships hold: C = 15 + .8YD T = .25Y I = 20 G = 15 X = 25 M = .1Y Treat (for simplicity) the price level as fixed. a) What is the marginal-propensity-to consume out of disposable income ? the marginal propensity to save out of disposable income ? the marginal propensity to import? b) What is the expression for the Aggregate Expenditure schedule? What does the AE schedule measure? What is the slope of the AE schedule? c) What is the equilibrium level of national income? If national income is less than this equilibrium, why will firms increase production? If national income is greater than this equilibrium, why will firms reduce production? 2. As a result of a boom in the United States, exports increase from 25 to 35. a) How will the equilibrium level of national income change? Relate your answer to the slope of the AE schedule. b)
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This note was uploaded on 12/22/2009 for the course BIGBOOK_01 Bigbook_01 taught by Professor Bigbook_01 during the Spring '09 term at University of Toronto.

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ECO100Assign10 - James E Pesando Economics 100...

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