In the News: Just How Stimulating Are Those Checks? To get an idea of how much t
ID: 1181839 • Letter: I
Question
In the News: Just How Stimulating Are Those Checks? To get an idea of how much those government rebate checks have spurred spendingExplanation / Answer
==>AMPC = delta C/delta Y = 60/100 =0.6 ==> ASavings =Aggregate Income -Consumption = 300 - 330 =-30 ==>Y = 5000C = 200 + 0.9*Y = 4700Y = C + II = Y-C= 300Change in inventory =300 (increase) ==>They decrease output to reduce inventories and (reduce cost for storing in the inventory) ==>Less than, as taxes are independent of Y ==> 1C + S = Ydelta C + delta S =delta Y ==>Spen.................