32. (9 pts) Suppose we know that in our economy, C = $20 + .8Y, with everything expressed in trillions of dollars. a) Ho

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32. (9 pts) Suppose we know that in our economy, C = $20 + .8Y, with everything expressed in trillions of dollars. a) Ho

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32. (9 pts) Suppose we know that in our economy, C = $20 + .8Y,
with everything expressed in trillions of dollars.
a) How did Keynes interpret .8? What did he call it, and what
does it mean?
Suppose we know that in this economy, AE = $100 + .8Y.
b) What did Keynes predict the expenditure multiplier would
equal?
c) Use your answer to b) to calculate equilibrium GDP.
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