# Suppose that government spending is decreased from

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Suppose that government spending is decreased from its initial level by \$50. Holding everything else constant, what will be the change in the equilibrium level of output given this spending change?
6 Q.16. Consider an economy characterized as follows: C=500+0.75Y d I=450 5000i + 0.15Y G=600 X=200 M=25+0.25Y T=250+0.2Y Tr =150 where Y is output, Y d is disposable income, C is consumption, I is investment, i is interest rate, G is government spending, X is export, M is import, T is taxes and Tr is government’s transfer payments. i. Government expenditures increase to 700. ii. Exports decrease by 25%. iii. Transfers increase by 50. iv. Import function becomes M=125+0.25Y MULTIPLE CHOICE QUESTIONS
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• Spring '14
• Inflation, Gdp, Inflation rates, equilibrium level

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