Suppose the investment demand function changes and is now
AE = C + I + G + (X-M)
C = 800 + .75(Y – T) - 30 (r)
I = 600 – 50(r)
G = 300
X- M = -25
T = 80
r = 5
Price level P is fixed at 1 (P=1)
Suppose the investment demand function changes and is now I=700 – 50(r).
1. The new value of equilibrium output is
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