ECON105week2questions

ECON105week2questions - Co = 50, Io = 30, b = 0.8 (a) Find...

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QUESTION 1 Imagine an economy with no government and no trade. Suppose that consumers are desiring to spend at least $25, plus 75% of their disposable income. Also, suppose that investment in this economy is $35. (a) What is the equilibrium level of income in this economy? (b) What is the equilibrium level of private saving in this economy? QUESTION 2 Imagine a closed market economy with the following parameters:
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Unformatted text preview: Co = 50, Io = 30, b = 0.8 (a) Find and show the equilibrium output in this economy using an AE graph. (b) If autonomous consumption increases by 20, what will be the new level of output? What will be the level of private saving? (c) Instead of changing autonomous consumption by 20, what value of MPC will achieve the same new equilibrium? ECON105 week 2 questions Eldar Sehic SFU 2010-1...
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