How do I solve? Investment = 100, government expenditure = 75, net taxes fixed at 100, and consumption (C) is the function C = 25 + 0.8Yd where Yd is disposable income and Y is GDP.

thanks but not really ok with it...this is the real question...

suppose that for a particular economy ,investment expenditure i=100,government expenditure G=75, and tax T=100 in adition personal consumption expenditure is C is given in a function below

c=25+0.8yd

a..what is the level of equilibrium

b.what is the value of expenditure multiplier

c.what is the value of tax multiplier

Mar 26th, 2015

thanks but not really ok with it...this is the real question...

suppose that for a particular economy ,investment expenditure i=100,government expenditure G=75, and tax T=100 in adition personal consumption expenditure is C is given in a function below

A" consumar who is having a fixed incom and the price of the good are also fixed will attain equilbrium when the spends his money incom on different goods in sch a way that the rations of MU of the last units of the goods purchasased and their prices are equl".

Expenditurre multiplier;

Expenditure multiplier, measur the change in aggregate demand and expenditur.

simple expenditure include is the ratio change in aggregate demand.

Value of tex multiplier;

information to clculate the multiply expentidure is 1/mpc=1-75=25

solution

G(goverment)=75

I(Investment)=100

T(tax)=100

YD is disposbl incom GDP. wear (GDP) gross domastic production.

solution;

Y = C + I + G

C = 25 + 0.8*Yd

yd=y-1000

Y = 25 + 0.8 * (Y - 100) + 100 + 75

Solve

equation Y = C + I + G. You get dY/dG = 1 / (1 - c) where c is the marginal propensity to consume., c = 0.8.

best my work i explain full work............. no issu thanks

Mar 26th, 2015

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