You are given the following data concerning Freedonia, a new republic. 1)  Consumption is 200 when income is zero and the marginal propensity to consume is 0.6 out of every dollar increase in income 2)  Investment function: I = 200 3)  AE ≡ C + I 4)  AE = Y A. Derive the savings function?  B. Suppose equation 2) is changed to I = 150. What is the new equilibrium level of income (Y)? By how much does the $50 decrease in planned investment change equilibrium income? What is the value of the tax multiplier?  C. Plot the savings function from a.  on a graph with equation 2).

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