Construct graph to show original equilibrium level of income

Reference no: EM132180532

Question: A hypothetical two-sector economy is initially in equilibrium, with MPS = APS = 025Y and investment is .C100m. Subsequently MPS falls to 0.2Y.

(a) Construct a graph to show the original equilibrium level of income and the new equilibrium level of income after the fall in MPS.

(b) Why is there no change in investment in response to the decline in planned saving?

Reference no: EM132180532

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