Answer to Question #124371 in Macroeconomics for Godiraone

Question

How do i determine the equilibrium level of income using the income expenditure approach and savings investmet approach given the following information;

C=50+7/10, I=50, T=25, G=26, X=17, M=2+1/10Y

Answer 1

$\text{Using the income expenditure approach}$

$\text{Y=C+I+G+X-M}$

$\text{Y=50+0.7(y-25)+50+26+17-(2+0.1Y)}$

$\text{Y=50+0.7Y-17.5+50+26+17-2+0.1Y}$

$\text{Y=123.5+0.8Y}$

$\text{Y-0.8Y=123.5}$

$\frac{O.2Y}{0.2}$ $=\frac{123.5}{0.2}$

$Y=617.5$

$\text{Using savings investment approach}$

$\text{S+T+M}=\text{1+X+C}$

$\text{50+25+{7}/{10}}$$Y$ $=\text{50+17+26}$

$\text{75+0.1Y}=\text{93-75}$

$\text{0.1Y=18}$

$\text{Y=180}$