Question

Given the following information, Anwser all questions below

C= 400+0.85Y
I=250

a)What is the AE equation for this economy
B) What is the Equilibrium income?

Answer 1

a. AE equation

AE = C + I

AE = (400 + 0.85Y) + 250

b. Equilibrium income

The equilibrium level of income refers to when an economy or business has an equal amount of production and market demand.