Question

C= 85+0.75yd I = 30 G= 200 T = 20+0.2y

Yd = Y-T

Find the equilibrium level of income.

Calculate the equilibrium level of saving and consumption.

Find the value of APC and APS .

Y= C+I+G+NX

NX= X-M

C= 50+0.8Y I = 50 G = 100 X = 250 M = 0.2y + 100

Find the equilibrium level of National Income.

Find the Consumption level , Import or saving

Answer 1

1) The equilibrium level of income is:

$Y = C + I + G = 85+0.75(Y - 20 - 0.2Y) + 30 + 200,$

0.4Y = 300,

Y = 750,

Consumption is:

$C = 70 + 0.6×750 = 520,$

S = Y - C = 750 - 520 = 230.

$APC = 520/750 = 0.693,$

APS = 1 - APC = 0.307.

2) $Y = C + I + G + NX = 50 + 0.8Y + 50 + 100 + (250 - 0.2Y - 100),$

0.4Y = 350,

Y = 875.

$C = 50 + 0.8×875 = 750,$

S = 875 - 750 = 125.