b) The structural model of an economy is given as follows

C = 200 + 0.85Yd

Yd = Y - T

I = 200

G = 300

T = 100

Required:

i) Equilibrium national income (3 Marks)

ii) The change in Income following a change in investment by 100 (2 Marks)

iii) The Investment multiplier if investment changes by 100 (2 Marks)

iv) Expenditure multiplier if government expenditure changes by 50

(2 Marks)

v) Disposable income after the change in investment (3 Marks