MATH 141 Study Guide - Quiz Guide: Aggregate Demand, United States Dollar, Aggregate Supply
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Multiple choice (3 points each: suppose consumption decreases at each price level. Short answer/problems/essays: (15 points) assume the following open economy for questions 1a, 1b, 1c and 1d below: Determine (solve for) the equilibrium level of income or gdp (y). Determine the impact on income of a 50 increase in government spending from 250 to. Using the original data, compute the impact of a 50 decrease in taxes from 125 to 75. Determine the equilibrium level of income or gdp (y) Y = [300 + 0. 80(y 125)] + 150 + 250 + [115 (125 + 0. 05y] Assume g increases from 250 to 300 (net 50). We would expect an overall increase in y greater than the increase in g due to the spending multiplier effect. Y = [300 + 0. 80(y 125) + 150 + 300 + [115 (125 + 0. 05y)] Using original data, compute impact of tax reduction from 125 to 75 (net 50).