Introduction to Macroeconomics

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Suppose the following information is for a closed governed economy: C= cY^d , I = I* , G= G* , T=tY ....Assume further that there are no transfer payments. i. Write out the equation for desired aggregate expenditure ii. Compute the equilibrium national income and consumption iii. Derive the multiplier for this economy iv. What assumptions did you make about c and t v. Now assume transfer payment is $40, and you are given the following other data: Complete the table below. Hence or otherwise determine the equilibrium national income. NI Disposable Income Consumption Investment GS Tax Revenue AE 0 150 250 350 450 550 650 750 850