Consider an economy in which tax collections are always $400 and in which the four components of aggregate demand are as follows:
Find the equilibrium of this economy graphically. What is the marginal propensity to consume? What is the multiplier? What would happen to equilibrium GDP if government purchases were reduced by $60 and the price level remained unchanged?
![2459_113c62ec-3b02-40b7-ae98-1375c9ad6e6d.png](https://secure.tutorsglobe.com/CMSImages/2459_113c62ec-3b02-40b7-ae98-1375c9ad6e6d.png)