For problems 1-6, assume that autonomous consumption = $400, MPC = 0.75 and intended investment = $900.?   1. Write down the...

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For problems 1-6, assume that autonomous consumption = $400, MPC = 0.75 and intended investment = $900.?

 

1. Write down the consumption function given the above information. 

2. Determine the level of consumer spending and the level of savings, if the national income is $4500. Please remember to show your work. 

3. What is the level of consumer spending that the firms are expecting, if the national income is $4500. Please show your work. Hint: Y= C+Ii 

4. Is the economy in equilibrium? Why or why not? 

5. Solve for the equilibrium level of national income, using the formula Y= C+I

 

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