Question

Please answer,

Consider a simple AD-AS model. The MPC = 0.8, the net tax rate t = 0.2, the marginal propensity to import m = 0.14. The aggregate demand function is given by P = 80 - Y, where P is the price level (GDP deflator) and Y is real GDP (billion). The aggregate supply function is given by P = 20 + Y. If the government increased its purchases G by $1 billion, ceteris paribus, what is the increase in equilibrium Y*?

Answer 1

fFind the sum of

4

4

​

and

4

8

4

8

​

in simplest form. Also, determine whether the result is rational or irrational and explain your answer.

Explanation: