Ask Question
12 December, 08:09

In Macroland, autonomous consumption equals 100, the marginal propensity to consume equals 0.75, net taxes are fixed at 40, investment is fixed at 50, government purchases are fixed at 150, and net exports are fixed at 20. Short-run equilibrium output in this economy equals: 1,000. 1,160. 1,280. 1,440.

+2
Answers (1)
  1. 12 December, 09:06
    0
    Correct option is D.

    $1440

    Explanation:

    Equilibrium output in this economy equals

    Y=C+I+G+NX

    C=a+b (Y-T)

    a=autonomous consumption=100

    b=marginal propensity to consume = 0.75

    Y=equilibrium GDP

    T=taxes=40

    I=investment = 50

    G=government spending = 150

    NX=net export = 20

    Y=100+0.75 * (Y-40) + 50+150+20

    Y=320+0.75Y-30

    0.25Y=290

    Y=290/0.25

    Y=1160

    the equilibrium GDP is $1160
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “In Macroland, autonomous consumption equals 100, the marginal propensity to consume equals 0.75, net taxes are fixed at 40, investment is ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers