Home / Questions / An economy has the following characteristics. All values are in $millions. [14 marks] C =
An economy has the following characteristics. All values are in $millions.[14 marks]
C = 120 + 0.9YD
YD = Y + TR - T
T = 100 + 0.1Y
I = 500
G = 600
TR = 200
X = 700
IM = 300 + 0.2Y
Where C is consumption, YD is disposable income, T is taxes, TR is transfer payments, I is investment, G is government expenditure, X is exports and IM is imports.
What is the value of the marginal propensity to save?
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Calculate the value of the equilibrium level of real GDP?
Suppose that the full employment level of GDP is $5000m. State the type of output gap persistent in this economy and calculate its size.
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