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Consider the following information for Norway.

Autonomous Consumption350
MPC0.65
Tax Rate0.2
Investment500
Government Expenditure200
Exports10
MPI0.3

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

 

Hint




Suppose that there is a decrease in Autonomous Consumption by $50.

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

 

Hint




What is the difference between the original and new GDP as a result of a decrease in Autonomous Consumption?

 

Hint