SNMENT1.pdf - + + o 页面视图 A朗读 Problem 3 (45 points) Note: In the following problem, it is important to show all the steps

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SNMENT1.pdf - + + o 页面视图 A朗读 Problem 3 (45 points) Note: In the following problem, it is important to show all the steps used to get your answers. Suppose an imaginary closed economy is characterized by the following: C = Co + ci(Y-T) Ī = 400 G = 400 T=300 C is consumption, Y and Yp are, respectively, income and disposable income, T is the level of taxes, I and G, are, respectively, private investment, and government spending. Co and cu are, respectively, autonomous consumption and the marginal propensity to con- sume; their values are unknown. However, the expression for private saving, S, is as specified below. S=0.5Y - 500 1. Find the equilibrium values of GDP, consumption, disposable income, and private saving. (5 points) 2. Find the expression of the investment multiplier in terms of co and/or (1. (3 points) 3. Find the values of co and c and the value of the investment multiplier (Hint: you'll prob- ably find co is equal to an even number, which is multiple of 2). (5 points) 4. From this question on, you must use when needed the values of co and cu found in the pre- vious question. Suppose now that the government tax revenue, T, has both autonomous and endogenous components, in the sense that the tax level depends on the level of in- come. T=to +tiy 3