If we consider a closed economy with no government spending or taxes, whose consumption function and investment function are given by the following equations:
C = 100,000 + .92Y
I = 40,000
a. What is the equilibrium level of aggregate output for this economy?
b. What is the saving function for this economy?
c. At the equilibrium level of Y, what is the level of saving in the economy?
d. What is the Keynesian multiplier for this economy? If I increases by $2,000, what will be the new equilibrium level of Y?