Private economy also the multiplier in a mixed open economy

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Reference no: EM1312312

Q. In an open economy, the consumption, tax also import functions are as follows:
C = 1.7 + .8 (Y - T)
T = .1Y +.2
IM = .06 + .1Y
Planned investment is $2 billion, planned government expenditures are $ 1 billion, also planned exports are $ 1 billion.

Calculate:

a. Real GDP at equilibrium expenditure

b. The investment multiplier

c. The autonomous tax multiplier

d. The marginal tax rate multiplier

e. The government budget deficit

f. Net export

g. The change in GDP resulting from a $ 1 billion rise in government expenditures

h. In problem g) the changes in saving, consumer expenditures also government
budget deficit.

Illustrate what is the difference among the multiplier in a closed private economy also the multiplier in a mixed open economy.

Reference no: EM1312312

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