Assume the following information for an economy: Natural level of output = $190b Autonomous consumption = 50 Total investment = 16 Government expenditure = 19 Autonomous taxation = 20 Marginal propensity to consume = 0.6 Based on this information answer the following questions: d) Assume the government increased spending by $5b. Calculate what the new equilibrium level of output will be.

Assume the following information for an economy: Natural level of output = $190b Autonomous consumption = 50 Total investment = 16 Government expenditure = 19 Autonomous taxation = 20 Marginal propensity to consume = 0.6 Based on this information answer the following questions: d) Assume the government increased spending by $5b. Calculate what the new equilibrium level of output will be.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section9.A: The Simple Algebra Of Income Determination And The Multiplier

Problem 4TY

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Assume the following information for an economy: Natural level of output = $190b Autonomous consumption = 50 Total investment = 16 Government expenditure = 19 Autonomous taxation = 20 Marginal propensity to consume = 0.6 Based on this information answer the following questions: b) Calculate the output ratio for the economy.
**I already have questions a,b and c complete but will attach to this so you can understand context Assume the following information for an economy: Natural level of output = $190b Autonomous consumption = 50 Total investment = 16 Government expenditure = 19 Autonomous taxation = 20 Marginal propensity to consume = 0.6 Based on this information answer the following questions: a) Calculate the actual equilibrium level of output for this economy. b) Calculate the output ratio for the economy. c) Using the Phillips Curve illustrate the current approximate position for the economy and identify this as point A. d) Assume the government increased spending by $5b. Calculate what the new equilibrium level of output will be. e) As a result of d) indicate how this will likely impact the economy using the Phillips Curve model from c). Label the new position the economy will approximately be at as point B. f) Discuss whether the government actions in d) are…
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