Answer to Question #132118 in Macroeconomics for Arike

Question

C=85+0.5Yd

I=85 C=60

net tax T=40+0.25Y

What is equilibrium of National income

Answer 1

To find the equilibrium of National Income, Aggregate Demand =Aggregate Supply.

AE=C+I

=85+0.5(Y-[40+0.25Y])+60+85

=230+(0.5[Y–40– 0.25Y])

=230+0.5(–0.75Y–40)

=230–0.375Y–20 =0

=210=0.375Y

Y=560