Question

Question ? In the Keynesian cross, assume that the consumption function is given by C-15007(Y-) Planned inve s -100-10 Government purchases and as we both 0. Graph consumption as function of income Graph investimentas function of the real estate 6. Suppose that the real interest rate is 5. Write the equation of the planned expenditure d. Suppose that the real interest rate is 5. What is the equilibrium level of income? . Using the equation of the planned expenditure in questione.graph planned expenditure as a function of income. Draw a 45 degree line Show the equilibrium level of income on the Keynesian cross [ Use the equation of the planned expenditure in question to answer this question povement purchases increase to 125, what is the new equilibrium income? Calculate the government purchases multiple Use the equation of the planned expendi n g to answer this question Suppose that the poemment decides to cutanes by 25. What is the beam income Calculate the temple Suppose that the real interest rate increases 10 Winite the new equation of the planned cxpenditure Calculate the new equilibrium level of income From questions d und j, we got two of real interest rate and income at which the poods market is in equilibrium. Plot the icone by using these two combinations of real interest rate and income

Answer 1

C2 150 +0.714-T) I= 10o-lor. Ge T-50 ca C 150 to.7(y-so) 150 to.74 - 35 115 to.7Y. z Consumption Cał tb.y. Disposable x Rate Income (6) Ir 100 alor. OI represents Irrestment expenditure in econoney. 9 of res. AE c t It ç. z 115 to 7 y +10o-loostso. 2 115+0.74 floor tot sto 215 +0.7y. Planned Aggregate Expenditure e AE² 215 +0.74. Interest Real Iz I-bre. o Irrestment lend) d income Ya AE (At equilibrium x = 215 to 74. 0.342 215 Y - 716.67.