Posted by: wit's end December 16, 2005
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C = 260 + 0.5Y
Ip = 50
Step (1): multiplier = 1/(1-MPC) = 1/(1-0.5) = 1/0.5 = 2
Step (2): total autonomous spending = Cautonomous + Ip + G + EX - IM
= 260+ 50+ 0 + 0
= 200
Step (3): Yequil. = 2* 310 = 620
:o) looks right to a lay person like me.