Use indifference analysis to demonstrate the income

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Reference no: EM1313913

Q1. Let us Suppose the subsequent figure represent the component of GDP in a county

C = 70+ 0.8YD
I = 60
G = 170

a. Calculate the equilibrium level of income

b. Calculate the multiplier in this model

c. Illustrate what is the level of saving in equilibrium

Q2. Suppose your budget constraint for those two goods is: $1000 = 8K + 5Y

a) Graphically derive your own demand curve for good X if its price does down from $4 to $2 also from $2 to $1.

b) Use indifference analysis to demonstrate the income, substitution also the total effects if good X is a non-Griffin inferior one.

Reference no: EM1313913

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