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Assume the following Keynesian model for the economy of Boogerland: Y = C + I + G + (X - M) C = 800 +
Assume the following Keynesian model for the economy of Boogerland: Y = C + I + G + (X - M) C = 800 + .75Y I = 400 G = 200 (X - M) = 200 T = 0 a. Find the equilibrium level of GDP. b. Using a "Keynesian cross" (or 45-degree line) diagram, show graphically the equilibrium in part a). Econ 162-A1, A2 Fall 2022 Problem Set Eight 2 c. What is the spending multiplier in this model? d. What is the level of consumption at equilibrium? Saving? e. If government spending increases by $100, find the new equilibrium level of GDP. Show graphically.
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