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mr_godi [17]
3 years ago
8

Suppose that autonomous consumption is 1 comma 500​, government purchases are 1 comma 500​, planned investment spending is 1 com

ma 500​, net exports are negative 500​, and the MPC is 0.6. Equilibrium GDP is equal to ​$ nothing. ​(Enter your response as an​ integer.)
Business
1 answer:
Ilya [14]3 years ago
7 0

Answer: $2500 ⇒ Equilibrium GDP

Explanation:

Given that,

autonomous consumption (\bar{C} )= 500

government purchases(G) = 500

planned investment spending (I) = 500

Net Exports (NX) = (-500)

Y = GDP

MPC (c) = 0.6

Consumption (C) = \bar{C} + cY

= 500 + 0.6Y

Y = AD

Y = C + G + I + NX

Y = 500 + 0.6Y + 500 + 500 +  (-500)

0.4Y = 1000

Y = \frac{1000}{0.4}

Y = $2500 ⇒ Equilibrium GDP

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