how much does the national income increase

Posted on 2014-03-21 10:05:00 in Economics by QUETELA

let us suppose that the consumption function is given as

           C = 25+ 0.8Y_d

Taxation is $ 100 million, investment of $ 100 million and government expenditure $ 75 million. Suppose that the government expenditure increase by $ 25 million. The question is : how much does the national income increase as a result of this increase as a result of this increase in government expenditure?

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