Use the following values to answer the question. C = 200 + .6(Y-T) T = 200 G = 200 I Planned = 120

Calculate the equilibrium values of a. GDP b. Consumption c. Private Saving d. Total Saving e. Sketch planned expenditure against income, Y. Your sketch should show the following: i) The value of the vertical intercept ii) The coordinates of one other point iii) The value of the slope of the expenditure line f. Suppose that GDP (Y) is equal to 1,400. Calculate the amount of unplanned inventory investment. g. What is the value of the multiplier in this problem? h. The multiplier is the change in GDP resulting from a change in autonomous spending. The multiplier occurs in a series of steps or rounds. Calculate the change in GDP in the second and third rounds of the multiplier process resulting from the $10 change in planned investment i. Suppose that taxes increased from 200 to 240, while all other components of autonomous spending remained constant. What would be the change in equilibrium GDP?

Use the following values to answer question C = 200 + .6(Y-T) T = 200 G = 200 Assume that planned investment (I Planned) varies with the interest rate (r) as follows: r I Planned 15 40 10 120 5 200 a. Calculate equilibrium GDP for interest rates of 10 and 5 percent. b. Use your answers to part a to sketch the IS curve. Your IS curve should show numerical values for two points.