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What is the equilibrium output

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Consider an economy with no government, imports, or exports, and with fixed prices andinterest rates. Let C = 150 + 0.60Y and I = 50.

a) What is the equilibrium output?

b) What is the value of the marginal propensity toconsume

c) What is the value of the multiplier

d) Suppose planned investment rises by 10 to I = 60. Calculate the new equilibrium outputin two ways. First, calculate the new equilibrium output using the multiplier from (c).AE (450) C1 + I + G1 C0 + I + G0 C1 G0 Y Y0 Y1 7Second, calculate the new equilibrium output using the same procedure as you did for (a),but with I = 60 instead of I = 50. Your answer should be the same under both methods.

Reference no: EM131177100

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