Forum Question 7 2 points Assuming that we are dealing with an economy with no government spending or trade, an economy'

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Forum Question 7 2 Points Assuming That We Are Dealing With An Economy With No Government Spending Or Trade An Economy 1 (24.87 KiB) Viewed 15 times

Forum Question 7 2 points Assuming that we are dealing with an economy with no government spending or trade, an economy's aggregate demand is given by its domestic consumption C and investment I, AD =C+1=C₂+C₂Y +1. In the economy's goods market equilibrium this equals its output: AD = Y. Solving for Y this yields: Y = [1/(1-C₁ )] (co + 1) Given this equation, which of the following statements is correct? The multiplier is given by 1/(1-1). The boost in the economy's output is the different, regardless of whether the aggregate demand shock comes from an increase in investment/or in autonomou consumption co Ofc1-1/3, then a $3 million increase in investment would result in around $4.5 million increase in output, ceteris paribus. O The smaller the marginal propensity to consume (1-1), the larger the multiplier. Click Submit to complete this assessment.