a Suppose that the real interest rate (r) is 5. Write the equation of the planned
expenditure ( PE,). Draw planned expenditure ( PE,) as a function of income. Label this
graph quot;figure 1quot;.lt;
b. Draw a 450 line in figure 1 and find the value of equilibrium level of income on the
Keynesian cross (Y1).~
c Calculate the government purchases multiplier. And interpret your answer.
AS G ADD 1, Y INCREASE 5Macroeconomics