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Question 1

Consider the following infomation for the US.

Autonomous Consumption180
MPC0.5
Tax Rate0.1
Investment600
Government Expenditure400
Exports30
MPI0.15

What is the equilibrium level of GDP in the income-expenditure model?

 

Hint




Question 2

Suppose that there is an increase in Exports by $10.

What is the new equilibrium level of GDP in the income-expenditure model?

 

Hint




Question 3

What is difference between the original and new level of GDP as a result of an increase in Exports?

 

Hint