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Economics

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1) If C = 1000 + 7/8[GDP-1000], I = 700 and G = 1000 and the economy is currently in equilibrium at 400 below full employment GDP, the correct fiscal policy would be to increase G by?

2) If C = 500 + 3/4[GDP- 100], I = 300, G = 400, Xn =- 10 and full employment GDP is 210 less than current GDP, the proper action would be to increase taxes by?

  • Economics -

    705
    3987.5

  • Economics -

    Thanks Alice for trying, but that's not correct, the first answer is 50 I figured it out, but I'm still having a hard time with the 2nd question.

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