1. Answer the following with respect to the graph below:
a) What is the level of desired investment expenditure (I) and government purchases (G)?
b) What is the autonomous portion of consumption? What is total autonomous expenditure?
c) Starting from equilibrium national income of $250 billion, suppose government purchases decreased by $25 billion. Describe the effects on the AE curve and on equilibrium national income.
d) Starting from equilibrium national income of $250 billion, suppose the net tax rate increased from 10% to 30% of national income. Describe the effects on the AE curve and on equilibrium national income.
e) Starting from equilibrium national income of $250 billion, suppose investment increased by $50 billion. Describe the effects on the AE curve and on equilibrium national income.