Question

Hypothetical economy is given by the following identities, C=2500+0.5Yd, I=1500, G=200, T=0.2Y, X=600, Z=5000+0.2Y.
(i)What is the value of total autonomous expenditure?
(ii) What is the value of the multiplier for this economy?
(iii)What is the value of induced consumption expenditure?

Answer 1

(i)What is the value of total autonomous expenditure?

$$2500$$

(ii) What is the value of the multiplier for this economy?

$$0.5$$

(iii)What is the value of induced consumption expenditure?

$$0.5 Y_d$$