Consider a small economy that is closed to trade, so its net exports are equal to zero. Suppose
that the economy has the following consumption function, where C is consumption, Y is real GDP,
I is investment, G is government purchases, and T is for net taxes: C=40+0.5(YT) Suppose G=$15
bilition, I=$50 billion, and T=$10 billion. Given the consumption function and the fact that, in a
closed economy, total expenditure can cscalcuiatec Y=C+I+G, the equilbrium outp. level is billion.
Suppose the govermment purchases are reduced by $150 billion. The new equilsbrium level of
output will be equal to Based on the effect of the change in government purchases on equilibrium
output, vou can tell that this economy's spending multiplier is equal to.
A Critique of the Proposed National Education Policy Reform
Consider a small economy that is closed to trade so its net.pdf
1. Consider a small economy that is closed to trade, so its net exports are equal to zero. Suppose
that the economy has the following consumption function, where C is consumption, Y is real GDP,
I is investment, G is government purchases, and T is for net taxes: C=40+0.5(YT) Suppose G=$15
bilition, I=$50 billion, and T=$10 billion. Given the consumption function and the fact that, in a
closed economy, total expenditure can cscalcuiatec Y=C+I+G, the equilbrium outp. level is billion.
Suppose the govermment purchases are reduced by $150 billion. The new equilsbrium level of
output will be equal to Based on the effect of the change in government purchases on equilibrium
output, vou can tell that this economy's spending multiplier is equal to
