1. Assume C=500+085Y; I=50;G=40;X=50;M=009Y; T=035(a) Determine the equation for

1. Assume C=500+085Y; I=50;G=40;X=50;M=009Y; T=035(a) Determine the equation for Total Expenditure and illustrate graphically. {6}(b) Use mulitplier to indicate how a decrease in investment of $50 will affect GDP. Show calculations and illustrate on graph.2. Assume S= -$200m+035Y; M=02Y; I=$300m;G=$150m;X=$140m; T=022Y(a) Calculate total spending function and equilibrium income. illustrate on graph(b) Indicate on graph the effect of a $200m increase in investment spending. Comment on magnitude of change in new equilibruim income relative to change in investment spending. Calculate new equilibrium income [6]
(c) Assume marginal tax changes to 032. How will this change influence total spending curve. Illustrate on the graph [6]