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macroeconomics

A closed economy is characterized by the following equations:

C = 250 + 0.8 YD
I = 340
G = 460
T = 400

Find out each of the following:
a) Equilibrium GDP (Y) d) Private Saving

b) Disposable income (YD) e) Public Saving

c) Consumption spending (C) f) The multiplier

4. Show the equilibrium in the above economy (as described in Question3) on a properly labelled diagram using Demand and Output lines. If the economy’s actual production level is at $3800, how would you characterize the situation in the economy? What needs to happen for this economy to get back to equilibrium? Explain and illustrate on your diagram.

. Suppose the money demand is given by Md = $Y(0.15 – i ) and $Y = $1600.

. What is the interest rate if Ms = $160?

. If the Central Bank wanted to reduce the interest rate to 3%, how much should it increase the money supply?

. Show your results in parts a and b on a properly labelled diagram.