Final Exam
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Question 2
𝑌𝐷 = 𝐶 + 𝑆 ⟹ 𝑆 = 𝑌𝐷 − 𝐶 ⟹ 𝑆 = 𝑌𝐷 − 30 − 0.4𝑌𝐷 = −30 + 0.6𝑌𝐷
⟹ 𝑆 = −30 + 0.6𝑌𝐷
𝐴𝐸 = 60 + 0.4𝑌
⟹ ∆𝑌𝑒 = 𝑌1𝑒 − 𝑌0𝑒 = 35.29 − 100 = −64.71
𝐶 = 15 + 0.15𝑌𝐷 (1) 𝑌 = 𝑌𝐷 (2) 𝐼 = 15 (3) 𝐴𝐸 = 𝐶 + 𝐼 (4) 𝐴𝐸 = 𝑌
Consider the following Keynesian consumption function: 𝐶 = 30 + 0.4𝑌𝐷, keeping in mind that 𝑌𝐷 indicates disposable income, which can be allocated only between consumption needs and savings.
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