Question

In a private closed economy, S =$100 + 0.3Y and I = 200. What is the consumption equation ? Determine the value of Y?

Answer 1

S$=$ I

100$+$ 0.3Y$=$ 200

0.3Y$=$ 200$-$ 100

0.3Y$=$ 100

Y$=$ 333.33

C$=$ Y$-$ S

S$=$ 100$+$ 0.3Y

S$=$ 100$+$ 0.3(333.33)

S=200

Substituting for the equation

C$=$ 333.33$-$ 200$=$ 133.33