Consider the following closed economy SI model set up Y = 18000 C = 300 + 0.8(Y − 2500) I = 3500 − 400(r) G = 3000 T = 2500 (a) Compute the impact on r and I, if G increases by 500. (b) Compute the impact on r and I, if G increases by 500. (c) Compute the impact on r and I, if both G and T increase by 500.

Consider the following closed economy SI model set up Y = 18000 C = 300 + 0.8(Y − 2500) I = 3500 − 400(r) G = 3000 T = 2500 (a) Compute the impact on r and I, if G increases by 500. (b) Compute the impact on r and I, if G increases by 500. (c) Compute the impact on r and I, if both G and T increase by 500.

Macroeconomics: Principles and Policy (MindTap Course List)

13th Edition

ISBN:9781305280601

Author:William J. Baumol, Alan S. Blinder

Publisher:William J. Baumol, Alan S. Blinder

Chapter8: Aggregate Demand And The Powerful Consumer

Section: Chapter Questions

Problem 2TY

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