- Given C =100+0.8Y, M=150+0.20Y, I=100, and X = 350:
- (4.0 pts) Determine YE algebraically using the trade balance approach. Draw a graph and label it carefully to avoid losing points. Note that S = Y – C.
- (5.0 pts) Starting with the algebraic and graphical results of the part (a), determine algebraically and determine graphically the effect on YE of a simultaneous decrease in S and M of 200 each. What is the size of trade balance deficit/surplus?