You know that the consumption function can be written as C  $300  0.8 (Y  T).

Using that information:

a) If Y  $600, and T  $100, what is consumption spending?

b) Suppose you find out that business fixed investment (I) is equal to $250.

Given the value for consumption you just determined, what is the equilibrium level of income for this economy?

c) If investment spending declined to $150, what is the change in the equilibrium level of income?