1 The Structural Model Of An Economy Is Given As Below C 400 0 8y D Consumption Func 1754241

1. The structural model of an economy is given as below

C=400+0.8Yd Consumption function

I=350 Investment

G=450 Government expenditure

T=200 Tax

i) Derive the savings function (2 marks)

ii) Derive the government expenditure and tax multiplier (4 marks)

iii) Compute equilibrium income and consumption (4 marks)

 

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