Given the following model:
Consumption: C = 500 + 0.5Yd
Investment: I = 250
Government Expenditure: G = 100
Proportional Tax Rate: t = 0.1
Imports: M = 0.25Y
Exports: X = 50
(Note: There is no lump-sum tax)
Since this is an open economy, the national income is given as below;
a) Given as 1000, then actual investment can be obtained as
Actual investment
b) Equilibrium
Comments
Leave a comment