C Aggregate Demand I-Work It Out Question 1In the Keynesian cross model, assume that the consumption function is given byC-$170+0.7(Y-T)Planned investment is $100; government purchases and taxes are both $100.a. Place points A and B to graph planned expenditure as a function of income.YPE1,5001,400400135015001.25020043501,100105014.000150200850880025 790700650600550Planned Expenditur 1,05015,000950900850& 8007507008 650600550500450400350300250200150250b. Calculate the equilibrium level of income.Y=$5007501,000 1,250Income, Expenditure1,500

Goods market gets equilibrium when Aggregate demand and aggregate supply are equal . At equilibrium…

Answered: In the Keynesian cross model, assume…

In the Keynesian cross model, assume that the consumption function is given by C=$170+0.7(Y-T) Planned investment is $100; government purchases and taxes are both $100.

Macroeconomics: Principles and Policy (MindTap Course List)

13th Edition

ISBN:9781305280601

Author:William J. Baumol, Alan S. Blinder

Publisher:William J. Baumol, Alan S. Blinder

Chapter8: Aggregate Demand And The Powerful Consumer

Section: Chapter Questions

Problem 8DQ

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