Given the following model: Y = C +|+ G + X - Ż C = a + bYd Z = Zo + zYd Yd = Y - T Suppose that b = 0.8 and z = .05. Suppose there is an autonomous increase in imports (Zo) of 20 units. To counteract...

Given the following model:<br>Y = C +|+ G + X - Ż<br>C = a + bYd<br>Z = Zo + zYd<br>Yd = Y - T<br>Suppose that b = 0.8 and z = .05. Suppose<br>there is an autonomous increase in imports<br>(Zo) of 20 units. To counteract this contraction<br>in domestic aggregate demand, assume the<br>government cuts taxes by 20 units. By what<br>amount, if any, will equilibrium income<br>change?<br>

Extracted text: Given the following model: Y = C +|+ G + X - Ż C = a + bYd Z = Zo + zYd Yd = Y - T Suppose that b = 0.8 and z = .05. Suppose there is an autonomous increase in imports (Zo) of 20 units. To counteract this contraction in domestic aggregate demand, assume the government cuts taxes by 20 units. By what amount, if any, will equilibrium income change?

Jun 11, 2022

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Given the following model: Y = C +|+ G + X - Ż C = a + bYd Z = Zo + zYd Yd = Y - T Suppose that b = 0.8 and z = .05. Suppose there is an autonomous increase in imports (Zo) of 20 units. To counteract...

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