Problem
We have the following information about a particular economy:
Y = C + I
C = 100 + 0.8Y
I= 50.
1) Describe the economy above, explaining the number and nature of the sectors that make up its structure.
2) What are the equilibrium values of income, consumption and saving in this Economy?
3) Find the value of the multiplier in this economy.
4) Express the equilibrium graphically using a Keynesian scissors drawing.