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Answer to Question #110574 in Macroeconomics for Dineo
Question #110574
Consider the following model of the economy: C=C0 +c1Yd
T=t0 +t1Y
Yd = Y - T
G and I are both constant (exogenous).
T=t0 +t1Y
Yd = Y - T
G and I are both constant (exogenous).
Expert's answer
Y=C+I+G+Xn
Y=C0+MPC(Y-T0)+I+G+Xn
Y=C-c1(Y-t0-tY)+MPC(Y-t0-t1Y)+I+G+Xn
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