Answer to Question #234081 in Macroeconomics for jas

Question #234081

calculate the aggregate expenditure and multiplier when C= 300+0.14Y, I= 700, G = 5000, TX= 3+ 0.0Y and TR= 90


1
Expert's answer
2021-09-07T13:18:23-0400

C=300+0.14YC=300+0.14Y

I=700I=700

G=5000G=5000

NX=3+0.0YNX= 3+0.0Y

Y=C+I+GY= C+I+G

Y=300+0.14Y+700+5000Y=300+0.14Y+700+5000

Y=6976.74Y=6976.74

AE=C+I+G+NX=Y+NXAE= C+I+G+NX= Y+NX

AE=6976.74+3+0.0(6976.74)=6979.7436AE= 6976.74+ 3+0.0(6976.74)= 6979.7436


MPC=300+0.14(6976.74)6976.74=0.183MPC= \frac { 300+0.14(6976.74)}{6976.74}=0.183

Multiplier=110.183=1.2= \frac {1}{1-0.183}=1.2


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