Consider the following behavioral equation: C = c0 + c1YD T = t0 + t1Y YD = Y – T G and I are both constant. Assume that t1 is between 0 and 1. a.Solve for equilibrium output b.What is the multiplier? Does the economy respond more to changes in autonomous spending when t1 is 0 or when t1 is positive? Explain. c.Why is fiscal policy in this case called an automatic stabilizer?
Stop worrying about assignment deadlines, let us help with this paper!
Smart students don’t copy paste information from all over the web hoping to get a good grade! Watch the video below to learn what they do: