Question 4 (12 marks) Assume the following for the economy of a country: a) b) Consumption function: G = 100+ 0.25Y Investment: | = 50 Export: X = 20 Import: M = 10+0.05Y Solve for the equilibrium income. (3 marks) What are the levels of import, consumption and saving at equilibrium? {3 marks) Calculate the leakages and injections of the economy. (2 marks) Derive the spending multiplier. (2 marks) Suppose marginal propensity to import increases by 0.05, what will happen to the spending multiplier? (2 marks) - End 01' Paper