Possible levels of Domestic Output and Income (GDP=DI)    …

  Possible levels of Domestic Output and Income (GDP=DI)        Consumption                      $320b                                      $320b                         330b                                         327b                         340b                                         334b                         350b                                         341b                         360b                                         348b Refer to the above data for an economy defined by GDP=C+Ig.  If gross investment (Ig) is $9b regardless of the level of GDP, the equilibrium level of GDP output will be

Assume the economy in this graph is initially made up of con…

Assume the economy in this graph is initially made up of consumption (C) and $50 of investment (Ig) spending.  Then if government spending (G) of $50, exports (X) of $50, and imports (M) of $50 were included in the economy, what would the new equilibrium GDP be?   

Now assume the economy is expanded to include investment spe…

Now assume the economy is expanded to include investment spending of $100.  Therefore, GDP = 0.9DI + 50 + 100 Using the multiplier you calculated above, what will the impact be to equilibrium GDP as a result of adding investment to the aggregate expenditures model?