Given the following on a closed economy. C = 40 + 0.8Yd C= consumption I = 55 – 200r I= Investment G = 20 G = government spending T = 20 T = Taxes Ye = 400 Ye = National Income r = rate of interest Dertermine the equilibrium level of consumption

Given the following on a closed economy. C = 40 + 0.8Yd C= consumption I = 55 – 200r I= Investment G = 20 G = government spending T = 20 T = Taxes Ye = 400 Ye = National Income r = rate of interest Dertermine the equilibrium level of consumption

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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Question

Given the following on a closed economy.
C = 40 + 0.8Yd C= consumption
I = 55 – 200r I= Investment
G = 20 G = government spending
T = 20 T = Taxes
Ye = 400 Ye = National Income
r = rate of interest

Dertermine the equilibrium level of consumption

Definition Definition Monetary value of all goods and services produced in an economy during a financial year. National income also refers to the total income earned by the factors of production during a financial year.

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