12. Assume that the economy is initially at its equilibrium level of GDP (Y). Assume that Ilp, G, T and Nx are constant numbers. If planned investment decreases by 20, government spending increases by 30, and taxes increase by 10, what is the change in the equilibrium level of GDP (Y)

12. Assume that the economy is initially at its equilibrium level of GDP (Y). Assume that Ilp, G, T and Nx are constant numbers. If planned investment decreases by 20, government spending increases by 30, and taxes increase by 10, what is the change in the equilibrium level of GDP (Y)

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter9: Aggregate Demand

Section: Chapter Questions

Problem 5.12P

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1. Show that equilibruim level of income is at a point where consumption plus investment schedules intersect the 45 degree line. 2. Suppose the level of autonomous investment in an economy is K200,000 and the consumption function is given below as c = 80+0.8Y, what will be the equilibrium level of income. 4.if MPcC is 0.8, what will be the increase in the level of income if investment is increased to K400,000. 5. What increase in investment is needed to raise the income by K4000, if MPC is 0.75? How much will be the increase in consumption and saving due to this increase in income. 3. Given the consumption level C= 50 + 75Y, if we assume autonomous investment is K200,000 at what level of income will savings become equal to investment?
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