Consider a closed economy

Consider a closed economy

Consider a closed economy to which the Keynesian-cross analysis applies.Consumption is given by the equation C = 200 + 2/3(Y ? T). Planned investment is 300,as are government spending and taxes.a. If Y is 1,500, what is planned spending? What is inventory accumulationor decumulation? Should equilibrium Y be higher or lower than 1,500?b. What is equilibrium Y? (Hint: Substitute the values of equations forplanned consumption, investment, and government spending into theequation Y = C + I + G and then solve for Y.)c. What are equilibrium consumption, private saving, public saving, andnational saving?d. How much does equilibrium income decrease when G is reduced to200? What is the multiplier for government spending?

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