Consider a macro model with demand - determined output. The equations are C=180 +0.8Yd, Yd = Y-T, I=400, G=600, T=.2Y X=120, and IM=0.14Y. What would be the z for this economy

The answer is 0.50

I missed this class and can't find it in great definition in the book. Could someone explain to me how to get this answer. Thanks!

"z" = MPC (in a closed economy no government)

"z" = MPC(1-t)-m (in an open economy)

This is all the information I can give you.

I have mid-terms in 3 hours and this is one of the only things I dont' understand. Would really appreciate the help!

I figured it out...

B(1-t)-IM

.8(1-.2)-.14=.50

So obvious answer right infront of me lol.

:thumbsup: