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An economy is described by the following equations: C = 40 + 0.9 (Y'T) I p = 80 G = 140 NX = 20 T = 170 Y* = 1,225 The multiplier in this economy is 10. a. Find a numerical equation relating planned aggregate expenditure to output.

Instruction: Enter your response for MPC rounded to one decimal place. PAE = + Y. b. Construct a table to find the value of short-run equilibrium output. Instruction: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers.

Output Y Planned aggregate expenditure (PAE) Y' PAE 1,070 1,170 1,270 1,370 1,470. Short-run equilibrium output is _________. By how much would government purchases have to change in order to eliminate any output gap? By how much would taxes have to change?

Instruction: Enter your responses rounded to one decimal place. In order to eliminate any output gap, government purchases would have to be __________. In order to eliminate any output gap, taxes would have to be ___________.

If Y* = 1,360, then by how much would government purchases have to change in order to eliminate any output gap? By how much would taxes have to change? Instruction: Enter your responses as integer values. In order to eliminate any output gap, government purchases would have to be by _________. In order to eliminate any output gap, taxes would have to be by _________.

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Darryn D'Souza
Darryn D'SouzaLv10
28 Sep 2019

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