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BEST ANSWER UP FOR GRABS-->Macreconomics Question. Any helpers out there?

A Keynesian model of the closed economy is described by the following equations

Y = C + I + G

where

C = bYd

Yd = Y + TR – T

TR = TR bar

T = T bar

I = I bar

G = G bar

(a) Derive, from first principles, the equilibrium level of income.

(b) Derive the Keynesian expenditure multiplier.

(c) If T = tY, derive the equilibrium level of income.

2 Answers

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  • Anonymous
    1 decade ago
    Favorite Answer

    A. Y=C+I+G

    Y=b(Y+TR-T)+I+G

    (1-b)Y=(bTR-bT+I+G)

    Y=1/1-b(bTR-bT+I+G)=equilibrium income

    B multiplier= 1/1-b

    C.Y=bY+bTR-btY+I+G

    (1/1-b+bt)Y=(bTR+I+G)

    Y=1/1-b+bt(bTR+I+G)

  • Anonymous
    5 years ago

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