Consider a closed economy, with fixed prices, represented by the following set of equations:

D = C + I + G
C = cYd
Yd = (1 - t)Y
t = 0.25, c = 0.8
I = 700 - 100r
G = 300
L = 2500 + 2Y - 500r

Where, D is the aggregate demand, C is consumption, Yd is the disposable income, t is the tax rate, I is investment, r is the interest rate (measured as a %), G is government spending and L is money demand.

(a) Let the government pursue an interest rate target of 7%. How does it achieve this target? Hence determine the equilibrium level of income Y, the government surplus tY-G and the private sector surplus (1-c) Yd - I. Comment on why D = Y in equilibrium.
(b) Using the same data, calculate the effects of increasing G to 400.
(c) Now let the government pursue a policy of holding the money supply constant at 500, and spending G = 300. What will be the level of income and the rate of interest?
(d) Using the above data, and continue to pursue a fixed money supply target of 500, recalculate your result when government spending increases to G = 400. Comment on the effects, of monetary factors, on the government spending multiplier.

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Consider a closed economy, with fixed prices, represented by the following set of equations:
D = C + I + G
C = cYd
Yd = (1 - t)Y
t = 0.25, c = 0.8
I = 700 - 100r
G = 300
L = 2500 + 2Y - 500r

Where, D is the aggregate demand, C is consumption, Yd is the disposable income, t is the tax rate, I is investment, r is the interest rate (measured as a %), G is government spending and L is money demand.
(a) Let the government pursue an interest rate target of 7%. How does it achieve this target? Hence determine the equilibrium level of income Y, the government surplus tY-G and the private sector surplus (1-c) Yd - I. Comment on why D = Y in equilibrium.

What would be the effect of a cut in taxes of $200 billion if the marginal propensity to consume were .9? Why would this policy be different from simply having the government initiate a $200 billion spending program (assuming the income multiplier is 10)? Support your answer with hypothetical calculations.

Given that the marginal propensity to consume (MPC) is .875:
(1) What is the marginal propensity to save (MPS)?
(2) Calculate the spendingmultiplier.
(3) If the government stimulates the economy via new spending of $150 million:
(a) What is the total projected spending that this could generate throughout the economy

Please see the attached file.
1. If the governmentspendingmultiplier is 6, what is the tax multiplier?
2. You are given this account for a bank:
ASSETS LIABILITIES
RESERVES $ 500 $ 3,500 DEPOSITS
LOA

Given an increase in spending of $1,000, and a Marginal Propensity to Consume (MPC) of 80% (8/10), what would be the total increase in the GDP (as a result of the Multiplier?) What would the Multiplier be? Please show all work to help me clearly understand this problem.

Problem No. 1 - Multiplier Computation
Compute the expenditure multiplier and tax multiplier if the MPC is
1. 0.80
2. 0.60
3. 0.90
Problem No. 2 - Changes to National Income (Y)
Suppose that there is a policy goal to increase national income $100 billion. Using the multipliers computed in Problem No. 1, determine

9. (Simple SpendingMultiplier) For each of the following values for the MPC, determine the size of the simple spendingmultiplier and the total change in real GDP
demanded following a $10 billion decrease in autonomous spending:
a. MPC = 0.9
b. MPC = 0.75
c. MPC = 0.6

The Federal Government increases spending by $1 billion to develop a new fighter jet. If the MPC in the economy is 0.1, what will be the overall spending effect of the economy?
What does MPC mean?

Suppose that the MPC is 0.8 and that $10 trillion of real GDP is currently being demanded. The government wants to increase real GDP demanded to $11 trillion. By how much would it have to increase governmentspending to achieve this goal?

Suppose that the MPC is 0.8, while the sum of planned investment, government purchases, and net exports is $500 billion. Suppose also that the government budget is in balance.
What is the sum of saving and net taxes when desired spending equals real GDP? Explain.
What is the value of the multiplier?
Explain why the m

Assume that a hypothetical economy with an MPC of .8 is experiencing severe recession. By how much would governmentspending have to increase to shift the aggregate demand curve rightward by $25 billion?
How large a tax cut would be needed to achieve this same increase in aggregate demand? Why the difference?
Determi