Consider the following macro model with demand-determined output: C = 150 + 0.9Yd,Yd= 0.8Y,I = 400,G = 700,T = (0.2)Y,X = 130,IM = (0.08)Y.Equilibrium national income is
A)1380.00.
B)1916.67.
C)2156.25.
D)3833.33.
E)4928.57.

Question

Quizplus · Accepted Answer

To find the equilibrium national income (Y), use the equation: Y = C + I + G + (X - IM). Substitute C = 150 + 0.9(0.8Y), I = 400, G = 700, X = 130, and IM = 0.08Y. Solve for Y: Y = (150 + 0.72Y) + 400 + 700 + (130 - 0.08Y). Simplifying gives Y = 1380 + 0.64Y. Solving for Y gives Y = 3833.33.

Consider the Following Macro Model with Demand-Determined Output: C =