1. Suppose that the economy can be described by the following equations: C = 400 + (8/9)*DI I= 300 G = 800 T= (1/2)*Y (X- М) — 0. a. If national income (Y) increased by $1, by how much would consumption increase? What is the name of this concept? b. Find the equilibrium level of output.

1. Suppose that the economy can be described by the following equations: C = 400 + (8/9)DI I= 300 G = 800 T= (1/2)Y (X- М) — 0. a. If national income (Y) increased by $1, by how much would consumption increase? What is the name of this concept? b. Find the equilibrium level of output.

MACROECONOMICS

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Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

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Question

1a) and b)

1. Suppose that the economy can be described by the following equations:
C = 400 + (8/9)*DI
I= 300
G= 800
T=(1/2)*Y
(X -М) — 0.
a. If national income (Y) increased by $1, by how much would consumption increase? What is
the name of this concept?
b. Find the equilibrium level of output.

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