Reference no: EM131082105

Given the following information for the Macro Economy answer the following questions. In this economy we have an MPC equal to 0.80, Autonomous Consumption equal to $800 billion and a Planned Investment equal to $200 billion. (a) Fill in the Consumption, Saving, Planed Investment and Aggregate Expenditures columns in the table below (the numbers are all in billions of dollars). Income (Y) Consumption (C) Saving (S) Planned Investment (I) Aggregate Expenditures (AE) $0 $0.00 $0.00 $0.00 $0.00 $1,000 $800 $200 $200 $800 $2,000 $1600 $400 $200 $1400 $3,000 $2400 $600 $200 $2000 $4,000 $3200 $800 $200 $2600 $5,000 $4000 $1000 $200 $3200 $6,000 $4800 $1200 $200 $3800 $7,000 $5600 $1400 $200 $4400 $8,000 $6400 $1600 $200 $5000 $9,000 $7200 $1800 $200 $5600 (b) Determine the equilibrium level of Income (Y). Please state the reason for your answer. The equilibrium level of income is $5000.00 this level gives the most in savings that is more efficient for this situation. (c) Calculate the Spending Multiplier for this economy (show how you got your answer). Spending multiplier = 1/MPS=1/1-MPC (d) State in one sentence what your answer in (c) tells us about any new spending that takes place in the economy. (e) Using the Spending Multiplier, determine the change in Planned Investment needed to get this economy to be in equilibrium at Full Employment if the Full Employment Level of Income is $8,000 billion. Please show your work and state exactly what your answer is.