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For an economy described by the following equations: C = 1,800 + 0.6 (Y – T)...

For an economy described by the following equations:

C = 1,800 + 0.6 (Y – T)
I p = 900
G = 1,500
NX = 100
T = 1,500
Y* = 9,000

Assume that the multiplier for this economy is 2.5.

Find the effect on short-run equilibrium output of:

a. An increase in government purchases from 1,500 to 1,600.

Instructions: Enter your responses as whole numbers.

Short-run equilibrium output will  (Click to select)  increase  decrease  to  .

b. A decrease in tax collections from 1,500 to 1,400 (leaving government purchases at their original value).

Short-run equilibrium output will  (Click to select)  increase  decrease  to  .

c. A decrease in planned investment spending from 900 to 800.

Short-run equilibrium output will  (Click to select)  increase  decrease  to  .

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Answer #1

+ tNX At eulb iu 900 t1500 t/o0 1800 to60Y-I500) t -900 O.99 34 300 8S00 a) AG= 16 00 100 IS00 AY AG 1-mPc Cloo) 250 I -0.6 i

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