The Mpe for the Economy Is 0

question 4

Essay

The mpe for the economy is 0.67.Autonomous consumption is $500,investment is $300,government spending is $250,and net exports are -$100.
(a)What is equilibrium income for the economy?
(b)If government policies were able to eliminate the trade deficit (and make net exports zero)without affecting anything else,what impact would that have on the equilibrium level of income?
(c)Suppose that the policies to increase exports in part (b)also had the effect of increasing investment by $50,and allowed the government to cut $30 in subsidies.Calculate the new equilibrium income.

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Definitions:

Untrained Observer

An individual making observations without formal training or methodologies, which can lead to subjective or inaccurate conclusions.

Ethnic Conflict

Disputes and hostilities between different ethnic groups, often resulting in violence and social unrest.

Gesellschaft

A type of society in which increasing importance is placed on the secondary relationships that are less intimate and more instrumental.

Gemeinschaft

German for community, a state characterized by a sense of common feeling among the members of a society, including strong personal ties, sturdy primary group memberships, and a sense of personal loyalty to one another; associated with rural life.