Question: Plot the consumption function C = 100 + 0.75Y on graph paper. a. Assuming no government sector, if planned investment spending is 200, what is

Plot the consumption function C = 100 + 0.75Y on graph paper.

a. Assuming no government sector, if planned investment spending is 200, what is the equilibrium level of aggregate output? Show this equilibrium level on the graph you have drawn.

b. If businesses become more pessimistic about the profitability of investment and planned investment spending falls by 100, what happens to the equilibrium level of output?

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