Ca=1,500-20r c=0.6 Ip=2,450-60r G=1,980 NX=-200 T=1,750
a. Compute the value of the marginal propensity to save.
b. Compute the amounts of autonomous planned spending, Ap, when the interest rate equals 0,2,4,and 6.
c. Compute the equilibrium levels of income when the interest rate equals 0,2,4 and 6. Graph the IS curve.
d. Suppose that policymakers decide to reduce the number of troops in Afghanistan, which results in a reduction of government spending of $80 billion. Compute the new amounts of autonomous dpending, Ap, when the interest rate equals 0,2,4 and 6.
e. Compute the equilibrium levels of income when the interest rate equals 0,2,4,and 6 and graph the new IS curve.
f. Suppose that a government expansion of health care causes its spending to increase by $160 billion from $1,960 to $2,120. Comute the new amounts of autonomous spending, Ap, when the interest rate equals 0,2,4,and 6.
g. Compute the equilibrium levels of income when the interest rate equals 0,2,4, and 6 and graph the new IS curve.
h. Suppose that initially the interest rate equals 4 and the economy is in equilibrium at natural real GDP, which equals 10,900. If monetary policymakers want to maintain income at natural real GDP, expalin by how much they will change the interest rate as a result of either the Afghanistan troop reduction or the expanded health care.