In the keynesian cross model, assume the consuption function is given by C=200=.75(Y-T) and planned investment=100, government purchases and taxes are each of them 100.
a) Draw a graph of planned expenditure as a function of income.
b)What is equilibrium level of income?
c) If government purchases increase to 125, what is the new equilibrium income?
d) What level of government purchases is needed to achieve the income of 1600?

Posted Date: 10/16/2012 5:55:52 AM | Location : United States

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