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Changes in autonomous expenditures affect income and output

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Research and discuss how the changes in autonomous expenditures affect income and output. Use the above example, let G0 = 200 and calculate the new equilibrium level of . Find ΔY given Δ, calculate the multiplier m.Interpret the meaning of the multiplier.

Marginal propensities: c1 = 0.8, i1 = 0.1, m1 = 0.15

Aggregate Expenditure: E = C0 + c1(Y - T) + I0 + i1Y + G0 + X0 - M0 - m1Y

Calculate aggregate expenditure in equilibrium where

Calculate and interpret the individual and combined effects of changes to X0 and M0 such that X0 = 150 and M0 = 150 and all other variables remain unchanged.

Also, calculate and interpret the values of the multiplier.

Reference no: EM131179900

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