Advanced analysis assume that the consumption schedule for


(Advanced Analysis) Assume that the consumption schedule for a private open economy is such that consumption is as follows: C = 80 + 0.9 Y Assume further that planned investment Ig and net exports Xn are independent of the level of real GDP and constant at: Ig = 50 Xn = 10 Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate expenditures: Y = C + Ig + Xn. a. What is the equilibrium level of income or real GDP for this economy? $ b. What happens to equilibrium Y if Ig changes to 30 ? Y = $ What does this outcome reveal about the size of the multiplier? The multiplier =

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Business Economics: Advanced analysis assume that the consumption schedule for
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