Assume an economy without government and without trade. Suppose the Consumption function is given by, whereas I=50. (Remember to show your work)*
A. What is the equilibrium level of income in this case?
B. What is the level of saving in equilibrium?
C. If, for some reason, output is at the level of 800, what will the level of involuntary inventory accumulation be?
D. If I rises to 100, what will be the effect on the equilibrium outcome?
E. What is the value of the multiplier, a, here?