Условие:
Consider an economy in which the goods market is characterized by the following set of equations:
• Consumption: C = 150 + 0.75(Y→ T )
• Investment: I= I
• Government Spending: G= G
• Taxes: T= T
(a) What is the difference between endogenous and exogenous variables? Identify the endogenous and exogenous variables from the equations above.
(b) Why is not possible to find unique values for the endogenous variables using the equations above?
(c) Adjust the model, and compute the equilibrium level of income, Y , assuming I = 50, G = 100 and T = 100. For that value of income calculate the corresponding levels of private and public saving and check if their sum equals investment spending.
(d) Suppose now that government spending increases from 100 to 125. How will this affect the equilibrium value of income? Based on that, what can you infer about the value of the government spending multiplier?
