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What is the equilibrium level of y

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Suppose C = 100 + 0.7 Y, G = 50, I = 120

In a closed economy Y = C + I + G

(a) What is the equilibrium level of Y ?

(b) What happens if the level of consumption becomes C = 130 + 0.7 Y?

(c) What happens if the level of consumption becomes C = 120 + 0.85 Y? Illustrate your answers using the Keynesian cross diagram.

Reference no: EM13887944

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