Problem
At the beginning of the year 2011, we have the following information for the Republic of Nurd:
Government Spending, G = $0
Net Taxes, T = $0
Planned Investment, I = $25 billion.
The citizens of Nurd consume 75 percent of their income and save 25percent. In other words their MPC =0.75 and MPS = 0.25.
Thus the consumption and saving function of Nurd are given to be:
C = 0.75Yd and S = 0.25Yd
where disposable income, Yd = Y-T
Currently the economy of Nurd is in equilibrium. As the leading econometrician of Nurd, you have estimated the full employment level of income for the economy to be $250 billion.
Calculate the adjustment in government spending, if any, to achieve full employment in Nurd.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.