Question

If C=100+0.75Y

T=50+0.5Y

X=200

M=50+0.25Y

G=150

Determine the equilibrium level of output

Answer 1

$Y=C(Y-T)+X+G-M;$

$Y=100+0.75×(Y-(50+0.5Y))+200+150-(50+0.25Y);$

$Y=100+0.75×(0.5Y-50)+200+150-50-0.25Y;$

$Y=100+0.375Y-37.5+300-0.25Y;$

$Y=362.5+0.125Y;$

$0.875Y=362.5;$

$Y=414.3;$