Only typed solution consumption C = 50 + 0.75 (Y - T)Investment I = 150 - 10rMoney demand L(Y,r) = Y - 50rgovernmment spending G = 250taxes T = 200money supply M = 750QUESTION 1 - refer to the information in the tableFor the Simple Keynesian/Keynesian cross model, for which:r = 0(i) use the relevant set of equations to solve for equilibrium level of income. What isthe equilibrium level of consumption? Graphically illustrate and explain(ii) what happens if planned investment exceeds 150? Is less than 150? Illustrateand explain

The objective of the question is to find the equilibrium level of income and consumption in a simple…

Answered: consumption C = 50 + 0.75 (Y - T)…

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section: Chapter Questions

Problem 2TY

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