Question
a) Suppose the economy is characterized by the following behavioral equations:
C = c0 + c1YD
YD = Y – T
I = b0 + b1Y
Government spending is constant. Note that investment now increases with output. Chapter 5 will discuss the reasons for this relation. Solve for equilibrium output.
C = c0 + c1YD
YD = Y – T
I = b0 + b1Y
Government spending is constant. Note that investment now increases with output. Chapter 5 will discuss the reasons for this relation. Solve for equilibrium output.
Answers
Anonymous
Y=(I-b0)/b1