3. If, consumption, C = 150 + .8Y, investment, I = $35, Govt. expenditures, G = $40, exports, X = $15, and imports, M = $10
a. What is the level of aggregate expenditures if income level were $1,000? 1 pt
b. What is the level of aggregate expenditures if income level were $1,200? 1 pt
c. Solve for the equilibrium level of income (output). (Hint: Set up the equation as
Y = C + I + G + X – M, and then solve for Y) 2 pts
4. Use the same information as in Problem 3, but suppose that investment increases by $10 to $45.
a. Calculate the new equilibrium level of income (output) 1 pt
b. What is the value of the spending multiplier? 1 pt
