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FinalQuestions - 5. 90 = 1/3(GDP). Now all we have to do is...

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Name ___________________________ Keynes Cross worksheet 1 Use the following information to find answers. Cf = 100 + 2/3(GDP-Tx) Ig = 25 G = 40 Tx = 15 Xn = -15 Cf = GDP example to answer #1. Take the value of Cf which is 100 + 2/3(GDP-Tx) and set that equal to GDP. So: 1. 100 + 2/3(GDP-Tx) = GDP. Then let’s simplify to get rid of the odd bits on the right hand side of the equation. Tx is equal to 15; so put that in. 2. 100 +2/3(GDP-15) = GDP. Now let’s get rid of the compound on the right hand side by multiplying 2/3 times GDP and times -15. 3. 100 + 2/3(GDP) -10 = GDP. Now let’s simplify further by grouping the whole numbers and subtracting. 4. 90 +2/3(GDP) = GDP. Now let’s get out GDP terms all on the left side of the equation. Do to that we subtract -2/3(GDP) form both sides and get:

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Unformatted text preview: 5. 90 = 1/3(GDP). Now all we have to do is solve for GDP. We know that 1/3 (GDP) = 90 so the whole GDP would be 3 times 90. Formally, you would multiply both sides of the equation by 3 and get 6. 270 = GDP To find the rest of these, simply repeat these steps and add it the new terms. DO NOT assume that GDP is always 270. It is NOT. It will change in each situation. Find: 1. Cf = GDP __270______ 2. Cf + Ig = GDP ____345________ 3. Cf + Ig + G = GDP ___465__________ 4. Cf + Ig + G + Xn = GDP _____420________ 5. Government and Investment Multiplier is _____3____ 6. Tax Multiplier is _-2 _______ Remember 45 line. Graph Lines represented by #3. and #4....
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This note was uploaded on 03/26/2012 for the course ECON GM545 taught by Professor Gotches during the Summer '11 term at Keller Graduate School of Management.

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FinalQuestions - 5. 90 = 1/3(GDP). Now all we have to do is...

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