IMA 2

1. Explain what changes will take place in the following cases [all the variables refer to totals for the econom'g,r as a whole]: a} Spending is equal to production and income. [3] b] Spending is greater than production and income. [3] c} Spending is less than production and income. [3] 2. Explain how equilibrium is restored in the following cases: a} Aggregate spending is larger than aggregate income. [2] b] Aggregate income is larger than aggregate spending. [2] 3. Assume: C : 100 + 0,8? 1': 150 Calculate the equilibrium level of income. Also illustrate it graphically. [5]