ЁЯУв Too many exams? DonтАЩt know which one suits you best? Book Your Free Expert ЁЯСЙ call Now!

  • google app store apple app store
  • тЬЦ

      Question

      Consider an economy described by the following

      equations: C = 100 + 0.6 ∗ (Y − T) (consumption function) I = 200 − 1000 ∗ r (investment function) G = T = 100 (government purchase and tax) where Y is the national income and r is the interest rate. Assume r = 10%, What is the equilibrium income?
      A 300 Correct Answer Incorrect Answer
      B 400 Correct Answer Incorrect Answer
      C 500 Correct Answer Incorrect Answer
      D 600 Correct Answer Incorrect Answer
      E 700 Correct Answer Incorrect Answer

      Solution

      The planned expenditure is

      PE=0.6Y+240.

      Equalize the planned expenditure and the actual expenditure we have

      0.6Y+240=Y

      which gives Y*= 600.

      Practice Next
      More Research Questions
      ask-question