Question: Consider a country with a consumption function, C=100+0.75Y, and an equilibrium income Y*=4000. (Assume this country has no government/taxes and no trade). a.Draw a Savings-Investment

Consider a country with a consumption function, C=100+0.75Y, and an equilibrium income Y*=4000. (Assume this country has no government/taxes and no trade).

a.Draw a Savings-Investment graph for this country, and show where the equilibrium Y* will land. Include the intercept and slope for both functions.

b.On graph from (a), demonstrate the change that would occur if people's expectations for the future worsened, and demonstrate how this will change the equilibrium Y*.

c explain one problem with relying on GDP as a measurement of well-being.

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