Calculate the equilibrium level of income or real gdp

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In the aggregate demand model in equilibrium, GDP (Y) = C + I + X (open economy).

Where C = consumption schedule = 100 + .75Y (consumption is a function of income).

Where I = planned investment = 20 and X = net exports = 40. Both are independent of GDP (Y).

Use the information provided above to complete the following:

Calculate the equilibrium level of income or real GDP for this economy.

What happens to equilibrium Y if Ig changes to 15? What does this outcome reveal about the size of the multiplier?

Reference no: EM13301690

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