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Suppose the economyr is three sector economy. The economy,r is represented by the following: where; C=250+25Y G=l 1:7) T=5 C = Consumption G = Government
Suppose the economyr is three sector economy. The economy,r is represented by the following: where; C=250+25Y G=l 1:7\") T=5 C = Consumption G = Government Expenditure I = Planned Investment T = Tax i. ii. iii. iv. From the information above, calculate the equilibrium level of income- (3 marks) From the information above, calculate the level of consumption and saving that occurs at the equilibrium level of income. {4 marks] Suppose planned investment increases by 3D%. Calculate the new equilibrium level of income. Given your answer, what is the size of the multiplier for this economy? (5 marks] Will the level of saving and consumption change as the economy:r adjusts to this change in planned investment?II Explain. ( 1' marks)
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