Question

Part A
The consumption function is C=50+0.75Y and investment is 1=50, exports are X=25 and the import
function is IM=20+0.25Y.
(a) Calculate the GDP (Y) for this economy?
10
(b) If the potential GDP =70, compare your answer with (a) and explain whether the economy
is recession or growth (inflationary).
10
(c) Explain how you would correct the problem faced in (b)
10
(d) Draw a diagram showing the aggregate expenditure function AE. (include 45° line)
5
(e) If there is an increase in I by 10, which would mean that the next l =50, what would
be the next level of Y (in your diagram the original Y = Y, and the next Y =Y) due to an
increase in investment by additional 10.
15
(f) By how much has the GDP (Y) increased due to increase in investment?
10
(g) Calculate the Multiplier of AE
5
(h) Draw the diagram of (e)
5
(i) What does 0.75 in consumption function mean?
5
() What does 0.25 in import function mean.
5
PART B
Lenovo​

Answer 1

no se lo que dice pero la tuya :v