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a) Derive the goods market demand curve in terms of the output (Y) and the exogenousvariables:c0,c1,b0,b1,g0,g1andT.

b)Draw the Goods Market Equilibrium. Be sure to label all curves, label the equilibrium point, and label the slope of each curve.

c)Solve for the equilibrium output (Y) in terms of the exogenous variables:c0,c1,b0,b1,g0,g1andT.

d)Supposeg1increases, but stillc1+b1+g1<1. Using a graph of the goods market, show how we would represent an increase in the value ofg1on equilibrium output y. Be sure to label all axes, curves, and equilibrium points.

Consider a model of the Goods Market characterized by the following equations: z = C+I+G Y C+I+G С Co + ci(Y – T) I bo + b1Y

Please explain each question and show the work!

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Answer #1

Es vol lobe u doo Aggregate demand : 2-c+I+ū mop per 19 At equilibinium : Y=2 (nume =demand) coupably] Consumption: Cactu (1-is us DL. slupe of As Slope AD CON is (c,+b, tg, ) |Pg. No. c) At equilibinum. Yaz y=z V = coth. tg - CT +(c + b, tg, y Y- (c

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