NAME 3.5 N1. (12 points) For a specific model where the consumption function is given as C = 100 + 0.75Y, while investment is 60, with no government purchases and no net exports, a) find the equilibrium level of income b) find the level of savings c) if, for some reason, output is at the level of 700, what will the level of unplanned inventory be? d) if I rises to 80, what will the effect be on the equilibrium income? e) what is the value of the multiplier, a, here? f) draw a diagram indicating the equilibrium in (a). 2 N2. ( points) Suppose the consumption function in problem N1 changes to C = 100 + 0.9Y, while I remains at 60 and there is no government purchases and no net exports: a) is the equilibrium level of income higher or lower than it was in problem N1(a)? Calculate the new equilibrium level, Y', to verify this. N3. (points) Now let us suppose we have full economy with C, I, G, but no NX: C =50 + 0.8YD I = 70 G = 200 TR = 100 t = 0.2 a) calculate the equilibrium level of income in this model b) calculate the multiplier in this model suppose t increases to 25%. What is the equilibrium income now? The new multiplier? d) if t= 100%, why is the multiplier 1