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ECONOMICS ECO Given the basic Keynesian model-as a starting point

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January 14th, 2018

2.Given the basic Keynesian model-as a starting point:Y = C + I + GC = a + b YdI = f (i) I ? f (Y) ie., MPI* = 0G = GoTx = Txo* MPI to represent marginal propensity of invest (NOT import)Now, if we add an import function, so that M = Mo + m Y,where m = marginal propensity to import (MPM), the effect on the size of multipliers would be to: (Points : 3)increase the value (in absolute value, ignore signs)decrease the valuehave no effect on the value

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