Question

A) An economist from Gordea gives you the following information about the country. He said that Consumption = $900, Investment = $300, Government Purchases = $500, Exports = $500, Imports = $600. He also told you that the marginal propensity of savings in this economy is 20%. Using the Keynesian Equation, calculate the income (Y) of this economy. B) The USA economy is going through the inflationary period. However, the government decided to increase spending by $9000B and simultaneously increase taxes by $3000B. Given the MPS of 25%, what is the overall effect of the government actions on the GDP (output) level?

          A) An economist from Gordea gives you the following information about the country. He said that
Consumption = $900, Investment = $300, Government Purchases = $500, Exports = $500, Imports = $600. He also told you that the marginal propensity of savings in this economy is 20%. Using the Keynesian Equation, calculate the income (Y) of this economy.
B) The USA economy is going through the inflationary period. However, the government decided to increase spending by $9000B and simultaneously increase taxes by $3000B. Given the MPS of 25%, what is the overall effect of the government actions on the GDP (output) level?

Added by Amber U.

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