Assume that consumption is represented by the following: C = 200 + 0.75Y. Also assume that investment (I) equals 300.
(a) Given the information, calculate the equilibrium level of income.
(b) Given the information, calculate the level of consumption and saving that occurs at the equilibrium level of income.
(c) Now suppose that individuals decide to increase their saving so that autonomous consumption falls by 100. The consumption function is now C = 100 + 0.75Y. Calculate the new equilibrium level of income, the new level of consumption, and the new level of saving.
(d) Based on your analysis in Part (c), did the level of saving change as a result of this increased desire to save? Explain.

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The Answer of Assume that consumption is represented by the following: C = 200 + 0.75Y. Also assume that investment (I) equals 300.
(a) Given the information, calculate the equilibrium level of income.
(b) Given the information, calculate the level of consumption and saving that occurs at the equilibrium level of income.
(c) Now suppose that individuals decide to increase their saving so that autonomous consumption falls by 100. The consumption function is now C = 100 + 0.75Y. Calculate the new equilibrium level of income, the new level of consumption, and the new level of saving.
(d) Based on your analysis in Part (c), did the level of saving change as a result of this increased desire to save? Explain.

Assume That Consumption Is Represented by the Following: C =