Question: C = 100 + 0.75*Y d Consumption Function I = 200Investment G = 300Government Spending X = 200Exports IM = 50 + 0.25*Y d Imports

C = 100 + 0.75*YdConsumption Function

I = 200Investment

G = 300Government Spending

X = 200Exports

IM = 50 + 0.25*YdImports

Yd = Y - TDisposable Income

T = 100Taxes

1.What is the equilibrium GDP(Y)?

2.Find the equation for C - IM in terms of Y (not Yd)

3.Explain in words what the equation for C - IM in question 2 tells us about the behavior of consumers in this economy.

4.Find the level of savings when this economy is in equilibrium

5.Assuming domestic savings go first to finance domestic investment find the excess savings or the savings deficiency.

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