Suppose that planned investment and planned government purchases do not depend on income:| = 15 and G = 17. Consumption, as you would expect, does depend on income via theconsumption function C = 2 + 0.75Y – 0.75T. Net taxes are T = 12.Your friend thinks that the equilibrium will be where Y = 150 but he is wrong. What is the bestdescription of this situation?the (Y, AE) point is above the 45 degree line, Y will adjust downthe (Y, AE) point is above the 45 degree line, Y will adjust upthe (Y, AE) point is below the 45 degree line, Y will adjust downthe (Y, AE) point is below the 45 degree line, Y will adjust up

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15 and G = 17. Consumption, as you would expect, does depend on income via the nsumption function C = 2 + 0.75Y – 0.75T. Net taxes are T = 12. our friend thinks that the equilibrium will be where Y = 150 but he is wrong. What is the best escription of this situation? O the (Y, AE) point is above the 45 degree line, Y will adjust down the (Y, AE) point is above the 45 degree line, Y will adjust up O the (Y, AE) point is below the 45 degree line, Y will adjust down ) the (Y. AE) point is below the 45 degree line. Y will adiust up

15 and G = 17. Consumption, as you would expect, does depend on income via the nsumption function C = 2 + 0.75Y – 0.75T. Net taxes are T = 12. our friend thinks that the equilibrium will be where Y = 150 but he is wrong. What is the best escription of this situation? O the (Y, AE) point is above the 45 degree line, Y will adjust down the (Y, AE) point is above the 45 degree line, Y will adjust up O the (Y, AE) point is below the 45 degree line, Y will adjust down ) the (Y. AE) point is below the 45 degree line. Y will adiust up

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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