What is income-expenditure equilibrium gdp

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Question: In an economy with no government and no foreign sectors, autonomous consumer spending is $250 billion, planned investment spending is $350 billion, and the marginal propensity to consume is 2/3.

a. Plot the aggregate consumption function and planned aggregate spending.

b. What is unplanned inventory investment when real GDP equals $600 billion?

c. What is Y*, income-expenditure equilibrium GDP?

d. What is the value of the multiplier?

e. If planned investment spending rises to $450 billion, what will be the new Y*?

Reference no: EM131530607

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