Now, for the closed economy autonomous consumption is Rs. 1200, marginal

propensity to consume is 0.8, tax rate is 0.2, fixed investment is Rs. 1400, and the

government spending is Rs. 1000.

i) What's the level of output in good's market?

ii) Now, a credit card theft reduces the marginal propensity to consume to 0.4.

What will be the new output level at good's market?

iii) Compare the savings in old and new market equilibria, where the savings is

exactly the amount of national savings.

iv) Do you think the savings are same in old and new good's market equilibria?

Provide appropriate reasoning for your answer. Does the economy better off

after the rise in marginal propensity to save?