Refer to the information provided in Figure 9.1 below to answer the questions that follow. Figure 9.1
-Refer to Figure 9.1. 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 9.1 below to answer the questions that follow.  Figure 9.1
-Refer to Figure 9.1. 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

At equilibrium, total spending (consumption + investment + government spending) equals total output. Given the consumption function C = 400 + 0.5Yd, where Yd is disposable income (Y - T, with Y being total income and T being taxes), and taxes are $200 billion, we first find the equilibrium income (Y). Disposable income Yd = Y - T = Y - 200. Substituting Yd in the consumption function gives C = 400 + 0.5(Y - 200). At equilibrium, consumption plus injections (I + G, where injections are investments and government spending) equals output (Y). Assuming all of Y is spent (Y = C + I + G), and given that there's no explicit value for I and G, we equate Y to the consumption function plus injections. Without the exact value of Y, we focus on the equilibrium condition where injections equal savings plus taxes. Since taxes are $200 billion and the consumption function is set, we look for the value of injections that balances the economy. The question directly asks for the value of injections at equilibrium, not providing enough data to calculate Y directly but implies that injections must balance out the leakage of taxes and savings. Given the lack of specific numbers for savings and the total income (Y), and without further information on government spending or investments, we cannot directly calculate Y or the exact breakdown of injections. However, the correct answer is identified as A) $700 billion, assuming the question provides enough context or a figure (Figure 9.1) not visible in this format, which would justify this equilibrium value for injections.

Refer to the Information Provided in Figure 9