[In all cases in which you are asked to illustrate with a graph,be sure to draw it carefully and cle
[In all cases in which you are asked to illustrate with a graph,be sure to draw it carefully and clearly label all curves andaxes.] 1. C = 160 + .6YD = 160 + .6(Y – T) I = 150 G = 150 T = 100 a) Solve for (in order): Y, YD, and C. Show your work. CalculateZ and confirm that Z = Y. b) Draw the goods market equilibrium that corresponds to thissolution. Carefully label everything in your graph including thenumerical value of the y intercept. c) Suppose that G increases to 200. What happens to Y? Calculateand illustrate on your graph. d) Suppose that the increase in G is financed by selling bonds.Explain why the increase in Y from part c is almost surely anoverstatement of the effect on Y. (Think: What is going on in thebond market?) . . .
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