(1) Consumption function: C = 100 + .8Y, (2) Planned investment: I = 38 (3) Government spending: G = 75 (4) Exports: EX = 25 (5) Imports: IM = .05 Y4 (6) Disposable income: Y= Y-T (7) Taxes: T= 40 (8) Planned aggregate expenditure: AE = C + I+ G+ EX– IM (9) Definition of equilibrium income: Y = AE

(1) Consumption function: C = 100 + .8Y, (2) Planned investment: I = 38 (3) Government spending: G = 75 (4) Exports: EX = 25 (5) Imports: IM = .05 Y4 (6) Disposable income: Y= Y-T (7) Taxes: T= 40 (8) Planned aggregate expenditure: AE = C + I+ G+ EX– IM (9) Definition of equilibrium income: Y = AE

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section9.A: The Simple Algebra Of Income Determination And The Multiplier

Problem 5TY

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