there are no exports and no imports,

(ii) investors always want to spend $200 billion, or I = 200,

(iii) consumption is a linear function of income, C=100+0.8Y Answer the following questions:

a. What is the marginal propensity to save (MPS)?

b. What is the saving equation?

c. What is the equilibrium level of national output/income (Y)?

d. At the equilibrium income level (Y*, your answer to

c) calculate private saving, and explain the relationship between private saving and planned investment?

e. What is simple multiplier due to any change in investment level?

f. To achieve an equilibrium level of national income of $2000 billion (Y=2000), how much should investment increase?