Lab 4 (Question 6) Lyryx Learning ECON 203

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Lab 4 (Question 6)
Name: Michael Owen
Date:



Question 6 [5 points]
Your solution to the question was :

For all the questions below select the appropriate answer:

a) Suppose the MPC and the slope of the AE function are 0.8, giving a multiplier of
formed government introduces a net tax on national income, NT = 0.2Y. As a res
the slope of the AE function is unchanged, the multiplier remains 5.0 and equ
income is not affected.
the slope of the AE function decreases to 0.64, the multiplier decreases to 1.5
national income decreases.
the slope of the AE function increases to 1.0, the multiplier and equilibrium na
increase.
the slope of the AE function decrease to 0.64, the multiplier decreases to 2.78
national income decreases.

b)




Based on the data for an open economy in the table presented:
the multiplier is 2.4 and equilibrium real GDP is 908.
the multiplier is 1.7 and equilibrium real GDP is 652.
the multiplier is 4.0 and equilibrium real GDP is 425.
the multiplier is 3.6 and equilibrium real GDP is 757.