In a keynesian model it is assumed that the consumption function is given by C= 2000 + 0.75 (Y-T) and the planned investment is 1,000 government purchases and taxes are both of those and formulate and draw a graph of planned expenditure as a function of income What is the equilibrium level in the part above If the government purchases increased by 1250 what is the equilibrium income With the aid of a algebra prove that a balanced budget multiplier is always equals to 1

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A: Given, C = 8 + 0.6Y, G = 9                   I = 14          X = M = 0

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A:

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A: Given  C=400+0.8(Y-T) I=310 G=140 T=200 So MPC=0.8

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