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2. Suppose that an economy is characterized by the following behav- ioral equations (in billions of euros): C = 480 +0.5YD I = 110 T

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2. Suppose that an economy is characterized by the following behav- ioral equations (in billions of euros): C = 480 +0.5YD I = 110 T = 70 G = 250 Solve for the following variables. a. Equilibrium GDP (Y) b. Disposable income (Yp) c. Consumption spending (C) 3. Use the economy described in Problem 2. a. Compute private saving, public saving, and investment spending. b. Solve for equilibrium output. Compute total demand. Explain how it affects production. C. Assume that G is now equal to

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