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Table GDP 1250 1500 1750 2000 2250 2500 2750 Taxes 200 200 200 200 200 200 200 DI C I 800 1000 1200 1400 1600 1800 2000 G 300 300 300 300 300 300 300...

This table( Attach file) represents several different potential output scenarios for a hypothetical economy. Based on the information presented, complete the following:

1. Calculate the Disposable Income (DI) at each level of GDP.
2. Calculate total spending (C+I+G) at each level of GDP.
3. What is the equilibrium level of GDP in the economy?
4. When the economy is at equilibrium, what is the level of saving?
5. What is the value of the MPC?
6. What is the value of the expenditure multiplier?
7. What is the value of the tax multiplier?
8. If the government increases spending by $100, what would be the new equilibrium value of GDP?
9. If the government wanted to achieve the same change in GDP as in part 8 by cutting taxes instead of increasing spending, how large would the tax cut need to be?


Table GDP Taxes DI C I G C+I+G 1250 200 800 300 200 1500 200 1000 300 200 1750 200 1200 300 200 2000 200 1400 300 200 2250 200 1600 300 200 2500 200 1800 300 200 2750 200 2000 300 200
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8398930.doc

GDP
1250
1500
1750
2000
2250
2500
2750 TAXES
200
200
200
200
200
200
200 DI C 600
800
1000
1200
1400
1600
1800 800
1000
1200
1400
1600
1800
2000 I
300
300
300
300
300
300
300 G
200
200
200
200
200...

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