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(2) The following information refers to the spending in Laddacity country. All values are in USD million.. Consumption function (C) Investment (1) Public Expenditure (G)

(2) The following information refers to the spending in Laddacity country. All values are in USD million.. Consumption function (C) Investment (1) Public Expenditure (G) Tax (T) Net exports (X-M) 350+ 0.65Yd 150 250 20 120 (a) Compute the equilibrium level of national income for the above economy. (4 m) (b) Assuming that full employment would be experienced at an income level of USD3, 000 million, state the problem this economy is facing. Illustrate your answer with a well-labelled diagram. (4 m) (c) Derive the saving function and calculate the marginal propensity to save. (2 m)

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