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Consider the following behavioral equations: C=c0 +c1YD T=t0 +t1Y YD = Y - T G and I are both constant. Assume that t1 is between 0 and 1. a. Solve for equilibrium output Y=C+I+G = C0+C1YD+I+G=C0+C1YD+I+G = C0+C1(Y-T)+I+G= C0+C1Y-C1T+I+G = C0+C1(t0+t1Y$2.99
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Consider the following behavioral equations: C=c0 +c1YD T=t0 +t1Y YD = Y - T G and I are both constant. Assume that t1 is between 0 and 1. a. Solve for equilibrium output Y=C+I+G = C0+C1YD+I+G=C0+C1YD+I+G = C0+C1(Y-T)+I+G= C0+C1Y-C1T+I+G = C0+C1(t0+t1Y
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Course
Economics
Institution
University Of Delhi
Consider the following behavioral equations:
C=c0 c1YD
T=t0 t1Y YD = Y - T
G and I are both constant. Assume that t1 is between 0 and 1.
a. Solve for equilibrium output
Y=C I G = C0 C1YD I G=C0 C1YD I G = C0 C1(Y-T) I G= C0 C1Y-C1T I G = C0 C1(t0 t1Y) I G= C0 C1t0 C1t1Y) I G => Y=(C0-C1t0 I...
C = 160 + 0.6YD I = 150
G = 150 T = 100
Solve for the following variables.
a. Equilibrium GDP (Y)
GDP = C + I + G + X – IM
C = 160 + 0.6YD *YD = Y-T
I = 150
G= 150
T = 100
So, GDP (Y) = 160 + 0.6(Y-100) + 150 + 150 => Y=0.6Y + 400 => 400 = 0.6Y => 0.4Y =
400. Therefore, Y=1000
b. Disposable income (YD)
YD=Y-T
YD=1000-100=900
c. Consumption spending (C)
C=160+0.6YD
=160+0.6X900 = 700
#3. Use the economy described in Problem 2.
a. Solve for equilibrium output. Compute total demand. Is it equal to production?
Explain.
As a result, the equilibrium output and total demand are equal.
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