Question: Question 2 Imagine an economy defined by the consumption function: C = 140 + 0.9 (Yd) Also assume that I = Investment = 400 G

Question 2 Imagine an economy defined by the consumption function: C = 140 + 0.9 (Yd) Also assume that I = Investment = 400 G = Government spending = 800 X = Exports = 600 M = Imports = 0.15Y A. Derive the aggregate expenditure function from the data. (2 marks) B. Calculate the equilibrium level of income (show workings). (7 marks) C. What is autonomous consumption? (1 mark) D. Calculate the value of the multiplier. (4 marks) E. Explain the following concepts: i. average propensity to consume (2 marks) ii. autonomous consumption (2 marks) iii. the accelerator principle (2 marks)

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