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The structural model of an economy is given as below C 400 0.8Yd Consumption function I=350 Investment G450 Government expenditure T200 Tax Derive the savings function

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)

May 18 2020 View more View Less

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