Household spending is given by the following equation: C = $100 + 0.70Yd and Intended Investment = $125.
(a) Calculate the equilibrium level of income in the economy, and explain why this is the case.
(b) If the current level of income is $500 calculate and explain what is happening in the economy?
(c) If the current level of income is $1,000 calculate and explain what is happening in the economy?