Business, 30.11.2020 18:00 rubend7769

Consider the following model i) C = 1650 + mpc (Y - tY)
ii) I = 800
iii) G = 500
iv) X - M = 500 - mpi (Y)

where: t = the (flat) tax rate

mpc = the marginal propensity to consume
mpi = the marginal propensity to import

Suppose mpc = 0.60, t = 0.15, mpi = 0.2 Given the information above, solve for the equilibrium output:

a. Y* = 3450
b. Y* = 5000
c. Y* = 5500
d. Y* = 1650

Answers: 1

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Consider the following model i) C = 1650 + mpc (Y - tY)
ii) I = 800
iii) G = 500