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The table below provides information for the economy of Zawi.
|C = 25 + 0.6Y||XN = 15 − 0.1Y|
|I = 100||G = 100|
a. The value of equilibrium income is $
b. Set up a balancing row to verify your calculations (the tax equation is T = 80 + 0.15Y and X = 210). Enter your responses as whole numbers.
c. If exports decrease by 60, the new equilibrium income is $
Equilibrium income, Y
= C + I + G + X net
= 25 + 0.6Y + 100 + 100 + 15 - 0.1y
= 240 + 0.5Y
=> Y - 0.5Y = 240
=> 0.5Y = 240
=> Y = 480 (ANSWER)
T = 80 + 0.15Y = 80 + 0.15*480 = 152
C = 25 + 0.6Y = 25 + 0.6*480 = 313
X net = 15 - 0.1Y = 15 - 0.1*480 = - 33
=> IM = X - X net = 210 - (-33) = 243
Y T Yd C S I G X IM
480 152 328 313 15 100 100 210 243
Check : Y = C + I + G + X - IM = 313 + 100 + 100 + 210 - 243 = 480 (OK)
If X decreases by 60, Y also decrease by 60.
So, new equilibrium income = 480 - 60 = 420 (ANSWER).
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