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The structural model of an economy is given as below C40008Yd Consumption function I350 Investment G=450 Government expenditure

1. The structural model of an economy is given as below
C=400+0.8Yd Consumption function
I=350 Investment
G=450 Government expenditure
T=200 Tax
i) Derive the savings function (2 marks)
ii) Derive the government expenditure and tax multiplier (4 marks)
iii) Compute equilibrium income and consumption (4 marks)

Apr 29 2020 View more View Less

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