Homework Answers
SOLUTION :
a.
Y
= C + I + G
= 160 + 0.6 YD + I + G
= 160 + 0.6(Y - T) + 150 + 150
= 460 + 0.6Y - 0.6 * 100
=> Y = 400 + 0.6Y
=> 0.4Y = 400
=> Y = 1000 = Equilibrium GDP (ANSWER)
b.
Disposable income
= Y - T
= 1000 - 100
= 900 (ANSWER)
c.
C
= 160 + 0.6 YD
= 160 + 0.6 * 900
= 700 (ANSWER)
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