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What is the new equilibrium level of gdp

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Reference no: EM131093664

1. Consider an economy in which C = 1000 + 0.75YD, I = 200, G = 300, T = 300, and (X-M) = 0.

2. Calculate equilibrium GDP

3. Calculate saving at this level of GDP (Hint: use the equation for leakages)

4. Calculate the spending multiplier

5. Calculate the tax multiplier

6. How will equilibrium GDP change is G increases by 100, and what is the new equilibrium level of GDP?

7. How will equilibrium GDP change if G and T both increase by 500, and what is the new equilibrium level of GDP?

Reference no: EM131093664

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