Discuss a closed economy to which keynesian-cross analysis

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Reference no: EM133295018

Assignment:

Consider a closed economy to which the Keynesian-cross analysis applies. Consumption is given by the equation C = 200 + 2/3(Y - T). Planned investment is 300, as are government spending and taxes.

a. How much is equilibrium Y? (Hint: Substitute the values of equations for consumption, planned investment, and government spending into the equation Y = C + l + G and then solve for Y.)

b. Calculate the equilibrium level of

1. consumption,

2. private saving,

3. public saving,

4. and national saving.

c. How much does equilibrium income decrease when G is reduced to 200?

d. How much is the government purchases multiplier?

Reference no: EM133295018

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