Question: Explain, using the mathematical definition of equilibrium Y, Y e , the role played by autonomous spending in determining the size of Y e and

  1. Explain, using the mathematical definition of equilibrium Y, Ye, the role played by autonomous spending in determining the size of Ye and changes in its size. Now, assume that there is a change in Ip of $100 and a change in G of $100, and that for every new dollar of income household saving rises by 25 cents; by how much will Ye change, if at all? Your third task is to compare this effect on Ye of the follow two other changes: A rise in G of $100 and a rise in Ta of $100 - is the effect the same as above? Why or why not? What if we had a rise in G of $100 but a fall in NX or $100 - would the change in Ye be the same? Why or why not?

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