Question

Consider the following production function. (, ) =

0.5 0.5 . Recall that the elasticity of
substitution is calculated according to the following formula: =

Answer 1

To calculate the equilibrium output when the marginal propensity to import is changed to 0.1, we need to determine the level of output where aggregate expenditure is equal to aggregate output.

Step-by-step explanation:

The question is asking to calculate the equilibrium output when the marginal propensity to import is changed to 0.1 in a given scenario. To calculate the equilibrium output, we need to determine the level of output where aggregate expenditure is equal to aggregate output. In this case, the marginal propensity to import is changed to 0.1, implying that for every one unit increase in output, imports will increase by 0.1 units.

Since the information about the production function is not provided, it is not possible to directly calculate the equilibrium output in this scenario. However, understanding the concept of the marginal propensity to import and its impact on the equilibrium output is important in analyzing economic situations.