View the step-by-step solution to:

AE = C + I + G + (X-M) C = 700 + .75(Y - T) - 30 (r) I = 500 - 50(r) G = 250 X- M = -25 T = 80 r = 5 Price level P is fixed at 1 (P=1) Suppose the...

AE = C + I + G + (X-M)

C = 700 + .75(Y - T) - 30 (r)

I = 500 - 50(r) 

G = 250

X- M = -25

T = 80

r = 5

Price level P is fixed at 1 (P=1)


Suppose the Consumption function changes to C=600 +.75(Y-T) - 30(r).

1)The new value of equilibrium output is =

2)The new value of equilibrium consumption is=

3)The Consumption function is still C=600 +.75(Y-T) - 30(r). The Keynesian spending multiplier in this economy =

Top Answer

Let me explain the... View the full answer

Sign up to view the full answer

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
Ask a homework question - tutors are online