(Answered) You are given the following information for aggregate

Management Studies

You are given the following information for Aggregate Expenditures. Income and spending in this economy are in billions of dollars.

C = 200 + 0.8(Y + TR - T)

I = 1000

G = 700

TR = 500

T = 0.1Y

X = 900

IM = 0.12Y

1) Calculate the equilibrium level of income.

2) Calculate the value of the Current Account. Assume that unilateral transfers equal zero.

3) Suppose Government spending is reduced by $300 billion. Calculate what effect this change will have on the value of the Current Account. Assume that unilateral transfers equal zero.

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