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Intermediate macro economicsSolution (1)C = 160 + 0.6Yd I = 150 G = 150 T = 100Y= AD = C+I+G =160 + 0.6Yd +150+150 = 160+ 0.6 (Y-T) +150 + 150 =160+ 0.6(Y-100) +150+150 =160+ 0.6Y-60+300Y-0.6Y=4000.4Y=400 =400/0.4 =1000Aggregate demand AD= C+I+G = 160 + 0.6Yd +150+150 =160+ 0.6 (Y-T) +150 + 150 =160+0.6*900+300 =160+540+300 =1000Thus, the aggregate demand is 1000 ii)Disposable income Y=Y-T =1000-100 =900 Thus, disposable income is 900

iii)Consumption C=160 + 0.6Yd =160+0.6*900 =160+540 =700Thus, consumption is 700 iv) Marginal propensity to consume and autonomous consumption C=160 + 0.6Yd Here, Marginal propensity to consume is 0.6 and autonomous consumption is 160 Solution (2)Consumption function: C= 100 + 0.75YdInvestment function: I = 250 – 4iGovernment spending: G= 150Tax function: T= 40 + 0.20YTransfer payment: TR= 40Transaction/precaution of money: Mt=0.25Y Speculative demand for money: Msp= -20iNominal supply of money: Ms= 1000Price level: P = 5 1)For IS curve equation

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