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Calculate the equilibrium level of income

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Reference no: EM131405632

Calculate the equilibrium aggregate expenditure and equilibrium income of an open economy with the following expenditure accounts:

C0 = 200, I0 = 200, G0 = 100, X0 = 100, M0 = 100, TP = 0, c1 = 0.8, i1 = 0.1, m1 = 0.15

where

E= aggregate expenditure

C0= autonomous consumption expenditure

I0= autonomous investment expenditure

G0= autonomous government expenditure

X0= autonomous export spending

M0= autonomous import spending

TP= personal taxes

c1= marginal propensity to consume

i1=marginal propensity to invest

m1= marginal propensity to import

  1. Calculate the equilibrium level of income/ aggregate expenditures.
  2. Assuming M = 200, calculate the new equilibrium and the multiplier.
  3. Assuming now that TP = 200, calculate the new equilibrium level. Hint:
  4. E = C0 + c1(Y - T) + I0 + i1Y + G0 + X0 - M0 - m1Y
  5. In equilibrium Y=EPost your spreadsheet as an attachment to the drop box titled Measurements Exercise. APA formatting is not necessary except when resources required citation.

Reference no: EM131405632

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