Answer to Question #306439 in Macroeconomics for vaish

Question

If

Consumption function C= 100+ 0.5Yd

TaxT= 100

InvestmentI= 200

ExportX= 120

Government Expenditure G= 150

ImportM= 0.03Y

Find the following:

1. The equilibrium level of income.
2. The next exports.

Answer 1

1. The equilibrium level of income.

$Y=C+I+G+X-M$

$C=100+0.5Yd$

$=100+0.5(Y-T)$

$=100+0.5(Y-0.03Y)$

$Y=100+0.5(Y-0.03Y)+200+150+120-0.03Y$

$Y=100+0.5Y−0.015Y)+200+150+120−0.03Y$

$Y=570+0.455Y$

$Y-0.455Y=570$

$0.545Y=570$

$Y=1,045.87$

2). The next exports.

$The \space value \space of \space exports (X) -value \space of \space imports (M)$

$X-M$

$=120-(0.03\times 1,045.87)$

$=120-33.38$

$= 88.62$