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Using the information below answer the following questions.
If AD is. Y = 3 (Ao - P/5)
and
AS is .. Y = 18.5 P
Ao = Co mpcTo + Io + Go + Xo Mo = 800
mpc = 0.2
Part 1: The Equilibrium price level (Pe1)
Part 2: The Equilibrium National Income (Ye1)
Suppose Government Spending increases by 35
Given the change in government spending:
Part 3: What is the new equilibrium price level (Pe2)
Part 4: What is the new equilibrium national income (Ye2)
Starting again at initial equilibrium, suppose now lump sum taxes are increased
by 17.5
Part 5: What is the new equilibrium prece level (Pe3)
Part 6: What is the new equilibrium national income (Ye3)

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Using the information below answer the following questions .pdf

  • 1. Using the information below answer the following questions. If AD is. Y = 3 (Ao - P/5) and AS is .. Y = 18.5 P Ao = Co mpcTo + Io + Go + Xo Mo = 800 mpc = 0.2 Part 1: The Equilibrium price level (Pe1) Part 2: The Equilibrium National Income (Ye1) Suppose Government Spending increases by 35 Given the change in government spending: Part 3: What is the new equilibrium price level (Pe2) Part 4: What is the new equilibrium national income (Ye2) Starting again at initial equilibrium, suppose now lump sum taxes are increased by 17.5 Part 5: What is the new equilibrium prece level (Pe3) Part 6: What is the new equilibrium national income (Ye3)