ECON 102 Quiz: ECON 102 UW Madison Quiz4Summer2017
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Write all answers neatly and legibly: use the short-run keynesian model to answer this set of questions. C = 10 + . 8(y t) where c is consumption spending, y is real gdp, and t is taxes. G = 10 where g is government spending. I = 10 where i is planned private investment spending. Put your final answer in the provided blanks. 1: (1 point) suppose the government increases its level of government spending to 30 (g". Holding everything else constant, what will be the direction and change in real. The direction and change in real gdp will be ____________________________: (2 points) go back to the initial information. Suppose that this government decides to increase government spending by 20 and taxes by 10 in order that they have a balanced budget. Write a verbal statement of what you think the impact of these spending changes will be on real gdp in this economy given this model and the initial information.