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Thu 5 Mar, 2015 10:18 pm
Hi everybody,
Can someone help me to resolve this exercice please ?
We are given the following for an economy:
Consumption= 108 + 0,8Y
Government spendings=368
Investments = 208
Net exports = 28 - 0,05Y
I have to calculate the equilibrium GDP, what I did, and I found 949 $.
And the multiplier, which is 4.
Then I'm asked to calculate the size of the budget deficit/surplus, knowing that the tax function is T= 106 + 0,1Y. How can I do that ?
Thanks for help !!
@svlf,
Hi, firstly, I don't know where you got $949 from, I suppose you multiplied things by your multiplier, which is not correct. The multiplier is for changes in spending, so unless there is change in consumption that you did not include in your question, I would start with that.
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