Question 11. Consider an open economy characterised by the following: C = 500 + 0.8(1 – t)Y t = 0.25 1 = 1200 G = 800 X

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Question 11. Consider an open economy characterised by the following: C = 500 + 0.8(1 – t)Y t = 0.25 1 = 1200 G = 800 X

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Question 11 Consider An Open Economy Characterised By The Following C 500 0 8 1 T Y T 0 25 1 1200 G 800 X 1
Question 11 Consider An Open Economy Characterised By The Following C 500 0 8 1 T Y T 0 25 1 1200 G 800 X 1 (61.72 KiB) Viewed 43 times
Question 11. Consider an open economy characterised by the following: C = 500 + 0.8(1 – t)Y t = 0.25 1 = 1200 G = 800 X = 1250 M = 0.18, where C is consumption, I is investment, G is government spending, t is the tax rate, M is imports and X is exports. Note that households consume out of their disposable income (1 – t)Y. = a) Solve for equilibrium output Y* in this economy. b) What is the multiplier in this economy?
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