Handout on the Keynesian Model
Use the Keynesian Model to answer the next few questions.
Y = C + I
C = a + b(Y – T)
I = autonomously given
T = 0
Y |
C |
S |
I |
C + I |
Inventory change |
Direction of Change in Y |
100 |
|
|
50 |
|
|
|
|
204 |
-74 |
|
|
|
|
500 |
|
|
|
|
|
Increase |
|
|
30 |
50 |
670 |
-20 |
|
|
724 |
|
|
|
|
|
The equilibrium level of real GDP is ____________.
Round |
Change in Y |
Change in C |
Change in S |
1 2 3 4 5 … |
|
|
|
Total |
|
|
|
What is the multiplier? ___________
Use the following Keynesian Model to answer the next few questions.
Y = C + I + G + (X – M)
C = a + b(Y – T)
I, G, (X – M), and T are all autonomously given
If the value of autonomous consumption is zero and T = $50, then the MPC must be equal to ________. The marginal propensity to save is ________. Saving is equal to __________ in equilibrium.