Calculate the equilibrium level of income or real gdp for

Question

Problem:

• In the aggregate demand model in equilibrium, GDP (Y) = C + I + X (open economy).
• Where C = consumption schedule = 100 + .75Y (consumption is a function of income).
• Where I = planned investment = 20 and X = net exports = 40. Both are independent of GDP (Y).

Use the information provided above to complete the following:

1. Calculate the equilibrium level of income or real GDP for this economy.
2. What happens to equilibrium Y if Ig changes to 15?
3. What does this outcome reveal about the size of the multiplier?
4. Can there be equilibrium level of output at below full employment?