1. Assume an economy is represented by the following: C= 240 +0.6Yd I=400 Calculate the equilibrium level of output. (3

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1 Assume An Economy Is Represented By The Following C 240 0 6yd I 400 Calculate The Equilibrium Level Of Output 3 1 (235.8 KiB) Viewed 35 times

1. Assume an economy is represented by the following: C= 240 +0.6Yd I=400 Calculate the equilibrium level of output. (3 marks) b. Calculate the levels of consumption and saving that occur when the economy is in equilibrium. (5 marks) G=2000 T= 2000 Suppose the government increases it expenditure to 3500 i. Explain an expansionary fiscal policy and the crowding out effect. Calculate the new equilibrium level of income. ii. Given your answer, explain the size of the spending multiplier? d. Graphically illustrate using the AE - Y graph the equilibrium income points. (5 marks) (4 marks) (3 marks) (5 marks)