You are given the following data concerning Freedonia, a legendary country: (1) Consumption function: C = 200

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You are given the following data concerning Freedonia, a legendary country:

(1) Consumption function: C = 200 + 0.8Y

(2) Investment function: I = 100

(3) AE C + I

(4) AE = Y

a. What is the marginal propensity to consume in Freedonia, and what is the marginal propensity to save?

b. Graph equations (3) and (4) and solve for equilibrium income.

c. Suppose equation (2) is changed to (2´) I =

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Principles Of Macroeconomics

ISBN: 9780374146412

10th Edition

Authors: Karl E. Case, Ray C Fair, Sharon C Oster

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Question Posted: Nov 08, 2024 08:00 AM

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You are given the following data concerning Freedonia, a legendary country: (1) Consumption function: C = 200

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Principles Of Macroeconomics

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