1 .

Generalizing the Closed Economy

1. Given to from outside the 4 Y =
C + 1 + 6
us
system
.

endogenous
YGtY The
>
2 1 = c +
by
-

3 .
y
= c+
1

C= a +
by +
y
=
a +
by + c+
dy
5
. c =
a
+
by
Y-by - dy = a + a =
10 billion b = 0 . 7
↓
y(1 -
b -
d) =
a +2 C = 10 billion + 0 .

74
Y 6 I
a +

dy
=
1 b -
-
d .
= c +

C= 2 billion d = 0.

I 2 billion + (0 17 y
=
.

7
.
I = 80 billa

. The Multiplier
2

=
80

-
$85 bil
1
-
. ) -
.
1

$5 bil increase in
y

.
3 Yes ->
doesn't matter which top variable I
you add to

y
4
.
is

S
.6 ↓ 10
billion
bil difference in
y for 1 bil ↑ in h

bil
a

Yes, consistent

7 Yes .

↓ =
- -
c -b d -
1-. % 2
: