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You Are Given the Following Income- Expenditures Model for the Economy

question 100

Essay

You are given the following income- expenditures model for the economy of Vulcan.
C = 200 + 0.8(Y - T) T = 50
G = 100
I = 140
(a) What is the equilibrium level of income in Vulcan?
(b) At the equilibrium level of income, what is the amount of consumption?
(c) What is the value of the government spending multiplier in this economy?
(d) If government spending increases to 150, what is the new level of equilibrium income?


Definitions:

Months

Units of time used in calendars that approximate the period required for the moon to complete its orbit around the Earth, commonly divided into 12 periods in a year.

Term Deposit

A bank deposit that has a fixed term and typically offers a higher interest rate, with the condition that the funds cannot be accessed until the term ends.

Interest Rate

The interest rate that a borrower must pay to a lender in exchange for using borrowed funds.

Accrued Interest

Interest that's been accrued but is still pending payment or receipt.

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