Consider an economy characterized by the following equations: C = 500+ 0.75Y+0.05W I 150 a. =...

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Consider an economy characterized by the following equations: C = 500+ 0.75Y+0.05W I 150 a. = Suppose the wealth is constant at W 10000, draw the aggregate function on a scale diagram along with the 45-degree line. What is the equilibrium level of national income? b. What is the marginal propensity to spend in the economy? What is the value of simple multiplier Use your answer from part (b), what would be the change in equilibrium national income if desired investment increased to 250? Show this in your diagram C. d. Begin with new equilibrium income from part (c). Now suppose household wealth increases from 10000 to 15000. What happens to the AE function and by how much does national income change? = Consider an economy characterized by the following equations: C = 500+ 0.75Y+0.05W I 150 a. = Suppose the wealth is constant at W 10000, draw the aggregate function on a scale diagram along with the 45-degree line. What is the equilibrium level of national income? b. What is the marginal propensity to spend in the economy? What is the value of simple multiplier Use your answer from part (b), what would be the change in equilibrium national income if desired investment increased to 250? Show this in your diagram C. d. Begin with new equilibrium income from part (c). Now suppose household wealth increases from 10000 to 15000. What happens to the AE function and by how much does national income change? =

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C 500 075Y 005W I 150 a Suppose the wealth is constant at W 10000 draw the aggregate function on a s... View the full answer