Question

C=500+0.4Yd, MPS = 0.6, I = 500, G = 700, X = 200 and M=50+0.2Y the Tax rate is 20% of Y. The population is 90 people. Calculate NI equilibrium

Answer 1

S+T+M=I+G+X

$S = - Co + MPS\times Y$

$-500+0.6 Y+0.2Y+50+0.2Y=500+700+200$

Y=1850