Given the following: C = 1400 + 3 / 5(Y - T) I =1800 T = 1950 G = 1750 Determine

Question

Given the following: C = 1400 + 3 / 5(Y - T) I =1800 T = 1950 G = 1750 Determine the equilibrium level of output ($10 250) Y = c + 1 + G Y = 1400 + (.6Y - 1170 ) + 1800 + 1750 Y - 6Y = 1400 + 1800 + 1750 - 1170 Y(1-.6) = 4950 - 1170 = 3780 / 4 = 9450 Let the following equations characterize an economy: C = 409 + 0.8(Y-T) I = 300 T = 250 G = 200 Calculate the equilibrium level of output ($3,500) Y - C + I + G Y = 900 + 0.84-(0.8 times 250) = Y -0.84 =(900 - 200 = 700) Y (1 -0.8) = 700 .2 = 700/2 = (3500)

Explanation / Answer

7.

Y=C+I+G

= 1400+ 3/5 (Y-1950) + 1800 + 1750

Y= 4950 + 3/5Y - 1170

2/5Y = 3780

Y =$9450

8.

Y=C+I+G

Y=400+0.8(Y-250) + 300 + 200

0.2Y=700

Y=3500

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