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Consider an economy described by the following equations: Aggregate consumption: C = 400 + 0.2(Y -T); Aggregate investment: I = 120 10i ; Government

Consider an economy described by the following equations: Aggregate consumption: C = 400 + 0.2(Y -T); Aggregate investment: I = 120 10i ; Government sector: G= T = 100. Derive the aggregate demand function; Calculate the equilibrium level of income. What is the effect of an increase in the interest rate on the equilibrium level of income?

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