Quest ..cider an imaginary economy called Keynesia, whose currency is the Key he consumption function of Keynesia, in the absence of taxes, can be repre Jared as C = 200 + 0.8 Y. Investment is autonomously set at 300. At this point there is no government. 1Derive the saving function for Keynesia. Calculate the equilibrium level of income using the aggregate expendi- ture approach (i.e. where Y = C + 1). 3 Present the equilibrium situation graphically by using the 45-degree line diagram. 44 Calculate the equilibrium level of income using the withdrawal-injec- tions approach. 45 Present the equilibrium situation graphically by using the withdrawal- injections approach. 4.6 What is the value of the multiplier in this simple two-sector economy? Out of the blue a government appears that does two things: (i) it buys goods and services to the value of 150 and (ii) it imposes a 10% tax on the income of households.1 47 Derive the new consumption function of Keynesia. 4.8 Derive the new saving function of Keynesia. Some textbooks (e.g. Mohr and Fourie) assume (realistically) that the tax is levied as a function of the level of income. Questions 4.6 to 4.17 are based on this assumption. Other textbooks (e.g. Mcconnell and Brue) assume that the tax is levied as a lump-sum lax. Questions 4.18 to 4.26 are based on the assumption of lump-sum taxes. Students who have been taught the model with a proportional tax should be able to handle the lump-sum tax. The reverse is probably not true, however