Enable text based alternatives for graph display and drawing entry

Try another version of this question

Question 1

Consider the following information for Mexico.

Autonomous Consumption390
MPC0.9
Tax Rate0.25
Investment1000
Government Expenditure100
Exports50
MPI0.25

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

 

Hint



Suppose that there is a decrease in Investment by $40.

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 Investment?

 

Hint