The Peruvian economy can be characterized by Equation 9.4.
EQUATION 9.4:
C = 400 + 0.6Yd
Taxes = 600
Equilibrium Output = $4,000
-Refer to Equation 9.4. At equilibrium, leakages in Peru equal

Question

Quizplus · Accepted Answer

At equilibrium output, Yd (disposable income) equals $3,400 ($4,000 - $600 in taxes). Substituting Yd into the consumption function, C, gives us: C = 400 + 0.6(3,400) = $2,440.

Leakages are equal to savings plus taxes: 
S + T = (Y - C) + T 
S + T = Y - C + T 
S + T = $4,000 - $2,440 + $600 = $2,160

Therefore, at equilibrium, leakages in Peru equal $1,560 ($2,160 - $600 in taxes).

The Peruvian Economy Can Be Characterized by Equation 9