ADVANCED ANALYSIS Assume that the consumption schedule for a private closed economy is such that consumption is: C = 100 + 0.75Y Assume further that planned investment Ig is independent of the level of real GDP and constant at Ig = 50. Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate expenditures: Y = C + Ig Instructions: Enter your answers as whole numbers.a. Calculate the equilibrium level of income or real GDP for this economy. Equilibrium GDP (Y) = $ . b. What happens to equilibrium GDP if Ig changes to 60? Equilibrium GDP (Y) = $ . What does this outcome reveal about the size of the spending multiplier? Spending multiplier = .
ADVANCED ANALYSIS Assume that the consumption schedule for a private closed economy is such that consumption is:
C = 100 + 0.75Y
Assume further that planned investment Ig is independent of the level of real
Y = C + Ig
Instructions: Enter your answers as whole numbers.
a. Calculate the equilibrium level of income or real GDP for this economy.
Equilibrium GDP (Y) = $ .
b. What happens to equilibrium GDP if Ig changes to 60?
Equilibrium GDP (Y) = $ .
What does this outcome reveal about the size of the spending multiplier?
Spending multiplier = .
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