Answer to Question #234081 in Macroeconomics for jas

Question

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

Answer 1

$C=300+0.14Y$

$I=700$

$G=5000$

$NX= 3+0.0Y$

$Y= C+I+G$

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

$Y=6976.74$

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

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

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

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