WhatsApp +1 (332) 244-5747

Keynesian income-expenditure two-sector model

Get your custom paper done at low prices


275 words/page


Double spacing


Free formatting (APA, MLA, Chicago, Harvard and others)


12 point Arial/Times New Roman font


Free title page


Free bibliography & reference

Assume the following Keynesian income-expenditure two-sector model:  AD = Cp + Ip   Cp = Co +  c .Y   Ip = Iowhere AD is aggregate demand; Cp is planned consumption; Ip is planned investment; Co is exogenous consumption; c is the marginal propensity to consume; Y is the level of income (and output); and Io is exogenous investment.(a)   What is the relationship between the ‘marginal propensity to consume’ and the ‘average propensity to consume’? (b) What is equilibrium Y in terms of Co, c and Io?(c)   Derive the multiplier for a change in Io.(d) What does this model assume about aggregate supply and the general price level?(e)   Represent this model in a 45? cross-diagram and illustrate the equilibrium level of income.


What Students Are Saying

Outstanding service, thank you very much.

Undergraduate Student

English, Literature

Awesome. Will definitely use the service again.

Master's Student

Computer Science