Answer to Question #37327 in Macroeconomics for Paul

Question

Y=Io+Go+X0-M, M=mo+m1yd,C=co+c1yd, T=tY and Yd=T-T
(i) Compute the equilibrium income
(ii) Derive any two multipliers in respect to the endogenous variables
(iii) Interpret the multipliers and explain their significance in policy context

Answer 1

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