In Berberistan, desired consumption, taxes, government spending, investment and net exports are given as follows: Cd=700 + c YD, T=100, G=370, I d=400 + aY,

Q1: interpret "c" and "a"

Q2: suppose that c = 0.7, a = 0.1. Calculate the equilibrium income.

Q5: Suppose that the recent coronavirus shock decreased the marginal propensity to invest. How does it affect the value of multiplier?

Q6: What is the balanced budget multiplier of the government? How much does the equilibrium income increase if government increase both its spending and tax by the same amount?