1.1. The following mathematical equations reflect the performance of the economy and inventory changes play a very important role in the SKM. Consider a simple Keynesian model where C= 540+0.7Y and I=360+0.2Y the country is considered closed economy, and without the government. 1.11.1. Determine the equilibrium income level of the country. (3) ANSWER: 1.1.2. Suppose that in this country last year's aggregate demand determines this year's production. If autonomous investment increases from 360 to 430 then what will be the national income in three years' time? ANSWER: 1.1.3. Given the solution in 1.1.2. briefly explain the type of effect the increase in autonomous investment had on national income. (2) ANSWER: 1.2. The consumption function for a simple economy is given by C= 330+ 1.2.1. Write an expression for savings in the economy. (2) ANSWER: 1.2.2. Express consumption in terms of Y when direct taxation is levied as a lumpsum tax, T. 210