Given the equations of the macro model, estimate the AE function, slope of the AE function, equilibrium level of national income and simple multiplier.
The equations of the model are:
C = 50 + 0.7VD T={0.2}Y
1 = 75 X = 50
G = 100 IM = {0A5)Y
a. Calculating the AE function and plot it in a diagram.What is total autonomous expenditure?
b. What is the slope of the AE function?
c. Compute the equilibrium level of national income.
d. Suppose X rises from 50 to 100. How does thisaffect the level of national income?
e. What is the simple multiplier in this model?