You Are Given the Following Information on the Macroeconomy: Consumption

question 10

Essay

You are given the following information on the macroeconomy: Consumption: 200 + 0.75Y
Investment: 100 + 0.10Y
Government Spending 500
Exports 100
Imports 50 + 0.25Y
Compute the equilibrium level of income, the size of the multiplier, and the change in equilibrium income for an increase in autonomous consumption of $50 million.

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Definitions:

Marginal Utility

The added satisfaction a consumer gets from having one more unit of a good or service.

Demand Schedule

A table that lists the quantity of a good or service demanded by consumers at various price levels.

Marginal Utility Data

Information that quantifies the added satisfaction a consumer gains from consuming one more unit of a good or service.

Prices

The amount of money required to purchase goods or services, set by supply and demand in a market.