a
Y=C+I+GY=100+0.7YD+80-150i+60Y-0.7YD=240-150iY=1−0.7D240−150i
b
Y−3000i=1000Y=1000+3000i
c
10000+250i=4250−125i
i=3755750=15.33%
Y=0.8(1−0.25)Y+900−50i+1000
Y=0.6Y+1900−50i
Y=4750−125i
Equilibrium interest rate is:
4750−125i=250i+10000
i=3755250=14%
Equilibrium national income will, therefore, be:
Y=4750−125×0.14=4732.5
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