Question

The following financial market date is given fan on an economy Currency = loco, Revine - 200 Deput = Calculate size gmoney multiplies o Monetary base OG?
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Answer 1

Answer:

(i) At equilibrium,

 AS=AD

Y= C+I 

=> Y= 200 + 0.5 Y + I 

=> Y - 0.5 Y = 200 + 1,500

=> 0.5 Y = 1,700

=> Y = 1,700/ 0.5 = 3,400

(ii) Consumption Function, C = 200+ 0.5 Y where Y in the income in the economy. 

So at national income 3,400 , consumption expenditure is 

 C = 200+ 0.5 ( 3,400) 

    = 200 + 1,700

    = 1,900

Explanation:

hope it helps.