Expert econometricians in the Republic of Greece estimate the following:

Real GNP (Y) 200 billion Euros Planned Investment Spending 75 billion Euros

Greece is a simple economy with no government, no taxes, and no imports or exports. Greek citizens are creatures of habit. They have a rule that everyone saves exactly 25 percent of income. (so citizens consume 75% of income) Assume that planned investment is fixed and remains at 75 billion Euros.

You are asked by the business editor of the Estia, the local newspaper, to predict the economic events of the next few months. 5 Questions.

By using the data given, can you make a forecast?

What is likely to happen to inventories?

What is likely to happen to the level of real GDP?

Is the economy at an equilibrium?

When will things stop changing?