Question: Given: c= 0.75 y = $40 w = $32 I = $3,600m G= $3,600m Labor force = 800m hours a) N* = ? b) Y*

Given:

c= 0.75

y = $40

w = $32

I = $3,600m

G= $3,600m

Labor force = 800m hours

a) N* = ?

b) Y* = ?

Suppose government decides to not engage in deficit spending (B= 0)

c) What's the new equilibrium level of employment?

d) What's the new equilibrium level of output?

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