. Here we investigate a partic

timer Asked: Nov 30th, 2015

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. Here we investigate a particular example of the model studied in Sections 9-2 and 9-3 with no government. Suppose the consumption function is given by C = 100 + .8Y, while investment is given by I = 50. a. What is the equilibrium level of income in this case? b. What is the level of saving in equilibrium? c. If, for some reason, output is at the level of 800, what will the level of involuntary inventory (i.e. unplanned inventory investment) accumulation be? d. If I rises to 100, what will the effect be on the equilibrium income? e. What is the value of the multiplier here? f. Draw a diagram indicating the equilibria in both (a) and (d).

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