Consumption function-what is the equilibrium level

Reference no: EM13692533

Assume the consumption function is C=200+0.75(Y-T), I=100; G=100; T=100.

a) What is the equilibrium level of Y?

b) Draw a Keynesian Cross diagram showing the equilibrium values Y and AE. Also show the value for the AE line at the vertical intercept.

c) If G increases to 125, what is the new equilibrium Y?

d) What level of G is necessary to reach 1600 for Y?

Reference no: EM13692533

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