Question

Find the equilibrium le find the equilibrium level of income and interest rate and the levels of C , I , Mt and Mz C= 89+0.6y I =120-150i

Answer 1

$Y=C+I$

$Y=89+0.6Y+120-150i$

$Y-0.6Y=209-150i$

$0.4Y=209-150i$

Thus, the equilibrium level of income is given by:

$Y=\frac{209-150i}{0.4}$ .