Assume that the consumption schedule for a private open economy is such that consumption is

C= 100 + 0.9Y

Assume further that planned investmentI_g, government spendingGand net exportsX_nare independent of the level of income.I_g= 60,G= 0 andX_n= 10. Recall also that, in equilibrium, the real output produced(Y)is equal to aggregate expenditures

Y=C+I_g+G+X_n

Instructions:Round your answers to the nearest whole number.

a. Calculate the equilibrium level of income or real GDP for this economy.

Equilibrium GDP (Y) =

b. What happens to equilibrium GDP if Ig changes to 40?

Equilibrium GDP (Y) =

What does this outcome reveal about the size of the multiplier?

Multiplier =