Plot the consumption function

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Reference no: EM131173815

1. Plot the consumption function C = 150 + 0.7Y.

2. Assuming no government sector, if planned investment spending is 250 billion dollars, what is the equilibrium level of aggregate output? Explain in full sentences, and show this equilibrium level of output on the graph.

3. If businesses become more pessimistic about the profitability of investment and planned investment spending falls by 100 billion dollars, what happens to the equilibrium level of output? Explain in full sentences, and show this equilibrium level of output on the graph.

Reference no: EM131173815

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