Suppose consumer spending is specified as C=k50 000+0.50Y, investment spending k75 000 and net exports k15 000.

a) Plot a line representing consumer spending and label it C. Also plot a line representing consumer, investment and net exports spending and label it (C+I+Xn). Draw a 45⁰ line though the origin. Find the equilibrium level of output.

b) Find the equilibrium level of output by algebraically equating output and aggregate spending.