For a three sector economy the following are given: = 25 + 0.6, I = 30, G = 25 where C = consumption, I = investment, and G = government expenditure. Find out the equilibrium output level.
Answers
Answer:
(i) At equilibrium,
(i) At equilibrium, AS=AD
(i) At equilibrium, AS=ADY= C+I
(i) At equilibrium, AS=ADY= C+I => Y= 200 + 0.75 Y + I
(i) At equilibrium, AS=ADY= C+I => Y= 200 + 0.75 Y + I => Y - 0.75 Y = 200 + 4,000
(i) At equilibrium, AS=ADY= C+I => Y= 200 + 0.75 Y + I => Y - 0.75 Y = 200 + 4,000=> 0.25 Y = 4,200
(i) At equilibrium, AS=ADY= C+I => Y= 200 + 0.75 Y + I => Y - 0.75 Y = 200 + 4,000=> 0.25 Y = 4,200=> Y = 4,200/ 0.25 = 16,800
(i) At equilibrium, AS=ADY= C+I => Y= 200 + 0.75 Y + I => Y - 0.75 Y = 200 + 4,000=> 0.25 Y = 4,200=> Y = 4,200/ 0.25 = 16,800(ii) Consumption Function, C = 200+ 0.75 Y where Y in the income in the economy.
(i) At equilibrium, AS=ADY= C+I => Y= 200 + 0.75 Y + I => Y - 0.75 Y = 200 + 4,000=> 0.25 Y = 4,200=> Y = 4,200/ 0.25 = 16,800(ii) Consumption Function, C = 200+ 0.75 Y where Y in the income in the economy. So at national income 16,800 , consumption expenditure is
(i) At equilibrium, AS=ADY= C+I => Y= 200 + 0.75 Y + I => Y - 0.75 Y = 200 + 4,000=> 0.25 Y = 4,200=> Y = 4,200/ 0.25 = 16,800(ii) Consumption Function, C = 200+ 0.75 Y where Y in the income in the economy. So at national income 16,800 , consumption expenditure is C = 200+ 0.75 ( 16,800)
(i) At equilibrium, AS=ADY= C+I => Y= 200 + 0.75 Y + I => Y - 0.75 Y = 200 + 4,000=> 0.25 Y = 4,200=> Y = 4,200/ 0.25 = 16,800(ii) Consumption Function, C = 200+ 0.75 Y where Y in the income in the economy. So at national income 16,800 , consumption expenditure is C = 200+ 0.75 ( 16,800) = 200 + 12,600
(i) At equilibrium, AS=ADY= C+I => Y= 200 + 0.75 Y + I => Y - 0.75 Y = 200 + 4,000=> 0.25 Y = 4,200=> Y = 4,200/ 0.25 = 16,800(ii) Consumption Function, C = 200+ 0.75 Y where Y in the income in the economy. So at national income 16,800 , consumption expenditure is C = 200+ 0.75 ( 16,800) = 200 + 12,600 = 12,800