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Homework answers / question archive / An economy is described by the following equations C = 100 + (3/4)*(Y – T) IP = 50 – 500 * r G = 75 NX = 0 T = 100 Y* = 500 Find an equation linking planned aggregate expenditure to output

An economy is described by the following equations C = 100 + (3/4)*(Y – T) IP = 50 – 500 * r G = 75 NX = 0 T = 100 Y* = 500 Find an equation linking planned aggregate expenditure to output

Economics

An economy is described by the following equations

C = 100 + (3/4)*(Y – T)

IP = 50 – 500 * r

G = 75

NX = 0

T = 100

Y* = 500

  1. Find an equation linking planned aggregate expenditure to output. What is

autonomous expenditure and induced expenditure in this economy?

2. Define and calculate the marginal propensity to consume.

3. Let the interest rate be 10%, find the short-run equilibrium output.

4. The Keynesian Cross. Describe the points as precisely as possible. Include the business cycle phase, if any, of this economy.

5. What should the central bank do ? Be as precise as possible.

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