The document describes an income-expenditure model for a closed economy. It states that the initial equilibrium output level is $500 billion given consumption of C=50+0.5(Y-T), investment I=$50 billion, government purchases G=$255 billion, and taxes T=$10 billion. It then states that if government purchases are reduced by $150 billion, the new equilibrium output level will be $350 billion. This reveals that the economy's spending multiplier is 1.

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8. The income-expenditure model Consider a small economy that is closed to trade, so its net
exports are equal to zero. Suppose that the economy has the following consumption function,
where C is consumption, Y is real GDP, I is investment, G is government purchases, and T stands
for net taxes: C=50+0.5(YT) Suppose G=$255 billion, I=$50 billion, and T=$10 billion. Given the
consumption function and the fact that for a closed economy total expenditure can be calculated
as Y=C+I+G, the equilibrium output level is equal to billion. Suppose the government purchases
are reduced by $150 billion. The new equilibrium level of output will be equal to Based on the
effect of the change in government purchases on equilibrium output, you can tell that this
economy's spending multiplier is equal toConsider a small economy that is closed to trade, so its
net exports are equal to zero. Suppose that the economy has the following consumption function,
where C is consumption, Y is real GDP, I is investment, G is government purchases, and T stands
for net taxes: C=50+0.5(YT) Suppose G=$255 billion, I=$50 billion, and T=$10 billion. Given the
consumption function and the fact that for a closed economy total expenditure can be calculated
as Y=C aquilibrium outp level is equal to billion. Suppose the government purchases are reduced
by $150 billion. The new equilibrium level of output will be equal to Based on the effect of the
change in government purchases on equilibrium output, you can tell that this economy's spending
multiplier is equal toConsider a small economy that is closed to trade, so its net exports are equal
to zero. Suppose that the economy has the following consumption function, where C is
consumption, Y is real GDP, I is investment, G is government purchases, and T stands for net
taxes: C=50+0.5(YT) Suppose G=$255 billion, I=$50 billion, and T=$10 billion. 3 e consumption
function and the fact that for a closed economy total expenditure can be calculated as Y=C+I+G,
the equilibrium output 0.5 qual to billion. 1 the government purchases are reduced by $150 billion.
The new equilibrium level of output will be equal to 2 the effect of the change in government
purchases on equilibrium output, you can tell that this economy's spending multiplier is equal to