Try another version of these questions

Question 1

Consider the following information for the US.

Autonomous Consumption500
MPC0.55
Tax Rate0.25
Investment500
Government Expenditure200
Exports20
MPI0.4

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

 

Hint




Question 2

Suppose that there is a decrease in Investment by $20.

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

 

Hint




Question 3

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

 

Hint