Question 1Use the following equations to answer the questions below.The Peruvian economy can be characterized by these equations below.C = 400+ 0.6YdTaxes=600Equilibrium Output = $4,000a) Graph the consumption function in the income/output and aggregate expenditures space.Label your horizontal axis income/output (Y) and your vertical axis (AE). Label thevertical intercept and at least one other coordinate on the consumption function.What is the sum of investment and government purchases at equilibrium? Show yourwork.b)c)d)What is the equation for aggregate expenditure? Graph the aggregate expenditurefunction in the same graph from (a). Label the vertical intercept and equilibrium.At equilibrium, what is the level of saving in Peru? Show your work. On a separategraph, draw the saving function. Label your horizontal axis income/output (Y) and yourvertical axis saving (S). Label the vertical intercept and horizontal intercept.e) The President of Peru hires you as an economic consultant. He is concerned that theoutput level in Vulcan is too high and that this will cause prices to rise. He feels that itis necessary to reduce output by $10 billion. He is given the following 4recommendations for the use of fiscal policya. reduce government purchases by $4 billionb. increase taxes by $10 billionc. reduce government purchases by $10 billiond. increase taxes by $2.5 billionAs part of your explanation to the President of Peru, use the MPC to tell them the bestchoice.

As given C = 400+0.6Yd Taxes = 600 Equilibrium Income = 4000 Note as per our guidelines we can…

Question 1 Use the following equations to answer the questions below. The Peruvian economy can be characterized by these equations below. C=400+ 0.6Yd Taxes = 600 Equilibrium Output = $4,000 a) Graph the consumption function in the income/output and aggregate expenditures space. Label your horizontal axis income/output (Y) and your vertical axis (AE). Label the vertical intercept and at least one other coordinate on the consumption function. b) What is the sum of investment and government purchases at equilibrium? Show your work. c) What is the equation for aggregate expenditure? Graph the aggregate expenditure function in the same graph from (a). Label the vertical intercept and equilibrium. At equilibrium what is the level of saving in Paru? Show your work On a caporata d

Question 1 Use the following equations to answer the questions below. The Peruvian economy can be characterized by these equations below. C=400+ 0.6Yd Taxes = 600 Equilibrium Output = $4,000 a) Graph the consumption function in the income/output and aggregate expenditures space. Label your horizontal axis income/output (Y) and your vertical axis (AE). Label the vertical intercept and at least one other coordinate on the consumption function. b) What is the sum of investment and government purchases at equilibrium? Show your work. c) What is the equation for aggregate expenditure? Graph the aggregate expenditure function in the same graph from (a). Label the vertical intercept and equilibrium. At equilibrium what is the level of saving in Paru? Show your work On a caporata d

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter9: Aggregate Expenditures

Section: Chapter Questions

Problem 7E

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Please help solve and explain this equation