Want detailed explanations thanks!

Demand side: (45pts) Suppose we are given the following forms for aggregate con- sumption demand and investment demand: C= a(Y - T ) + c ( Y'-T) -or I = -dir + daz + dyk, where ci, c2, c are fixed positive parameters for consumption demand and dy, d2, dy are fixed positive parameters for investment demand. Furthermore, the government runs a balanced budget, G = T and G' = T 1. (15pts) Briefly explain what the consumption demand function says. State the two equations which define the output demand curve (IS curve). Explain how these two equations are used in deriving the output demand curve. 2. (10pts) Suppose we are given following values: c = 0.6, c2 - 0.5,cs = 10, di = 20, d2 = 1 and ds = 0.5. Suppose that Y' = 15, G = 10, G' = 10, ?' = 5, K = 15 and r = 0.1. Calculate desired aggregate expenditures for three levels of aggregate income: when Y = 35, Y = 40 and when Y = 45. 3. (5pts) For the given values calculate the level of aggregate expenditure that lies on the output demand curve. Show your work. 4. (15pts) Suppose G increases to G = 12. By how much does the desired expendi- ture line shift up? By how much does expenditure change? By how much does consumption change at the new level of expenditure