a=$250b, I=$500b, G= $350b, MPC=80%;Calculate:the multiplierthe equilibrium level of incomethe equilibrium level of consumptionthe equilibrium level of saving Now assume that individuals in the aggregate would like to save more. Write a new consumption function that reflects this change. What is your new assumption?

The multiplier value depends on the value of the marginal propensity to consume. Higher the MPC,…

Answered: a=$250b, I=$500b, G= $350b, MPC=80%;…

Macroeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506756

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter11: Fiscal Policy: The Keynesian View And Historical Development Of Macroeconomics

Section: Chapter Questions

Problem 11CQ

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a=$250b, I=$500b, G= $350b, MPC=80%;

Calculate:

the multiplier
the equilibrium level of income
the equilibrium level of consumption
the equilibrium level of saving

Now assume that individuals in the aggregate would like to save more. Write a new consumption function that reflects this change. What is your new assumption?

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