# Does the equilibrium level of income remain unchanged?

In the aggregate expenditure model assume that the consumption function is given by C = 800 + 0.8 ( Show more In the aggregate expenditure model assume that the consumption function is given by C = 800 + 0.8 (Y TP) that planned investment. I. equals 200 and that the government purchases G and taxes TP each equal 200. Assume that there is no import or export spending. [a.] Calculate the equilibrium level of income. Consider that government purchases G increases by 100 (all else constant) [b.] Given the new information calculate the new equilibrium level of income. [c.] Given the new information calculate the value of the multiplier. Show working. Now consider that the government decides to increase their purchases G by 100 and impose taxes TP also by 100 so that the government budget remains balanced. [d.] Given the new information. Calculate the new equilibrium level of income [e.] Does the equilibrium level of income remain unchanged? Show less

### QUICK QUOTE

Approximately 250 words
\$12