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

Ask an Expert

Related Discussions:- KEYNESIAN CROSS MODEL, Assignment Help, Ask Question on KEYNESIAN CROSS MODEL, Get Answer, Expert's Help, KEYNESIAN CROSS MODEL Discussions

Write discussion on KEYNESIAN CROSS MODEL
Your posts are moderated

Write your message here..

Related Questions

Staic general equilibrium model, given the consumer maximizing problem subj... given the consumer maximizing problem subjest to consumption, the firm''s maximizing problem subject to revenue as a function of labour demand, and the government''s budget as G=T.

What is difference between explicit cost and implicit cost, What are the di... What are the difference between explicit cost and implicit cost? Both are concerns to Opportunity Cost and Decisions: An explicit cost is a cost which involves essentially

Determined at the intersection of the money demand, Consider the supply of ... Consider the supply of money graph above. Which of the following can be determined at the intersection of the Money Demand and Money Supply curves? The rate of open market transact

Microsoft stock buy call options, Suppose you buy call options on Microsoft... Suppose you buy call options on Microsoft stock. Each option costs $2 and has the strike price of $40 and the expiration date July 1. Discuss whether you would exercise the options

Increases in the price of gasoline over the past few years, How have you re... How have you responded to increases in the price of gasoline over the past few years? How would you respond if the price of gasoline doubled over the next two years? What alternati

What is fixed cost and variable cost, What is fixed cost and variable cost?... What is fixed cost and variable cost? By the Production Function to Cost Curves: A fixed cost is a cost which does not depend onto the quantity of output generated. This i

Correlation of investment and interest rate, Suppose the demand for loanabl... Suppose the demand for loanable funds was stable but the supply fluctuated from year to year. what cause fluctuate in supply?

Monetary Economics, What is the difference between money multiplier and cre... What is the difference between money multiplier and credit multiplier

Wall street journal article, 1. An innovator, who creates new products and ... 1. An innovator, who creates new products and new ways to get business done, is referred to as: Select one: a. A manager. b. A capitalist. c. An entrepreneur. d. A creditor. 2

Define ndp, The following is the information from the national income accou... The following is the information from the national income accounts for a hypothetical country: GDP