Suppose that autonomous consumption is 500, government purchases are 1.500
Suppose that autonomous consumption is 500, government purchases are 1.500, planned investment spending is 500, net exports are 0, and the MPC is 0.75.
Equilibrium GOP is equal to $_______
Homework Answers
Equilibrium is at
Y=C+I+G+NX
C=consumption =autonomous consumption +MPC*Y
=500+0.75Y
Y=GDP
I=500
G=1500
NX=0=net export
Y=500+0.75Y+500+1500+0
0.25Y=2500
Y=10000
The equilibrium GDP is $10000
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Suppose that autonomous consumption is 500, government purchases are 1.500
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