The letters Y, C_a, I_g, X_n, G, and T stand for GDP, consumption, gross investment, net exports, government purchases, and net taxes respectively.Figures are in billions of dollars.C_a = 25 + .75(Y - T ) I_g = I_g0 = 50
X_n = X_n0 = 10
G = G₀ = 70
T = T₀ = 30
Refer to the above information.The equilibrium level of GDP for this economy is:

Question

Quizplus · Accepted Answer

To find the equilibrium level of GDP, we need to use the following formula:

Y = C + I + NX + G

where,
C = consumption
I = gross investment
NX = net exports
G = government purchases

Also, we have the following equations:

C = 25 + 0.75(Y - T)
I = 50
NX = 10
G = 70
T = 30

Substituting the values in the equation for Y, we get:

Y = (25 + 0.75(Y - 30)) + 50 + 10 + 70

Solving for Y, we get:

Y = $530 billion

Therefore, the equilibrium level of GDP for this economy is $530 billion. The answer is B.

The Letters Y, Ca, Ig, Xn, G, and T Stand

The Letters Y, C_a, I_g, X_n, G, and T Stand