1) Suppose S = -200 + 0.1Y. Equilibrium income would be 5000 if Investment were

a. 300

b. -300

c. -200

d. 200

2) Assume that the economy is initially at its equilibrium level of GDP. What will happen to the equilibrium level of GDP if:

planned investment decreases by 20, government spending increases by 30 and the MPC =0.8

a. GDP will increase by 50

b. GDP will decrease by 50

c. there will be no change in GDP

d. GDP will decrease by 10