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?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.
1. Watching how banana chips are made is akin to watching a performance. The cook works a slicer through peeled raw bananas at top speed. Thin discs of...
The announcement of a free trade agreement between the Maldives and China is another sign of Beijing’s success in its outreach in South Asia. Afte...
India’s admittance into the Wassenaar Arrangement, a multilateral export control regime, as its 42nd participating member is a big step forward in...
1. _________________________________________________________________________
2. This has been the fourth incident of a tiger straying into the...
As leaders at the World Trade Organisation’s 11th biennial Ministerial Conference in Buenos Aires seek to define the future contours of multilater...