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Depict graphically the equilibrium level of National Product (NP) using the Aggregate Expenditure (AE) function. Explain...

Depict graphically the equilibrium level of National Product (NP) using the Aggregate Expenditure (AE) function. Explain why the intersection of the 45 degree line and the AE function represents equilibrium by appealing to the difference between actual and desired

Given the following information;

C = 40 + 0.8Yd
I* = 50
and assuming fixed prices

  1. a) What is equilibrium NP ?
  2. b) If desired investment increases 25 what is the new equilibrium level of NP ?
  3. c) What is the new equilibrium level of savings?
  4. d) What is the new equilibrium level of consumption?
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