Assume that the consumption schedule for a private open


Assume that the consumption schedule for a private open economy is such that consumption C = 50 + 0.8 Y . Assume further that planned investment I g and net exports X n are independent of the level of real GDP and constant at Ig=30 and X n = 10. Recall also that, in equilibrium, the real output produced ( Y ) is equal to aggregate expenditures: Y = C + I g + X n . a. Calculate the equilibrium level of income or real GDP for this economy. b. What happens to equilibrium Y if Ig changes to 10? What does this outcome reveal about the size of the multiplier?

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Microeconomics: Assume that the consumption schedule for a private open
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