4. Usethefollowingvaluestoanswerquestion 4.

C = 200 + .6(Y-T)

T = 200

G = 200

IPlanned= 120

Calculatetheequilibriumvaluesof

a.GDP

b. Consumption

c. PrivateSaving

d. TotalSaving

e. Sketchplannedexpenditureagainstincome,Y. Yoursketchshouldshowthefollowing:

i) Thevalueoftheverticalintercept

ii) Thecoordinatesofoneotherpoint

iii) Thevalueoftheslopeoftheexpenditureline

f. SupposethatGDP (Y) is equal to 1,400. Calculate the amount of unplanned inventory investment.

g. Whatisthevalueofthe multiplier in this problem?

h. ThemultiplieristhechangeinGDPresultingfromachangeinautonomousspending. Themultiplieroccurs inaseriesofstepsorrounds. CalculatethechangeinGDPinthesecondandthirdroundsofthemultiplier

processresultingfromthe $10changeinplannedinvestment.i.Supposethattaxesincreasedfrom 200 to 240, while all other components of autonomous spending remained constant. Whatwouldbethechangein equilibrium GDP?