Refer to the information provided in Figure 24.1 below to answer the question(s) that follow. Figure 24.1
-Refer to Figure 24.1. Suppose that the consumption function is C = 400 + 0.5Yd and taxes are $200 billion, at equilibrium the value of injections are

Question

Refer to the information provided in Figure 24.1 below to answer the question(s) that follow.  Figure 24.1
-Refer to Figure 24.1. Suppose that the consumption function is C = 400 + 0.5Yd and taxes are $200 billion, at equilibrium the value of injections are

Quizplus · Accepted Answer

In equilibrium, injections equal withdrawals. The consumption function is C = 400 + 0.5Yd, where Yd is disposable income (Y - taxes). With taxes at $200 billion, Yd = Y - 200. At equilibrium, Y = C + I, where I is investment. Solving for Y gives Y = 400 + 0.5(Y - 200) + I. Simplifying, Y = 400 + 0.5Y - 100 + I, which leads to 0.5Y = 300 + I. Therefore, Y = 600 + 2I. In equilibrium, injections (I) equal withdrawals (S), and if we assume no savings, I = 700 billion.

Refer to the Information Provided in Figure 24