for an economy with C=$5000+0.6Y^D, I=$1000, G=$800, T=$1000, NX=$-200, where the dollar amounts are in millions of dollars, equilibrium income (in millions) is:

Question

for an economy with C=$5000+0.6Y^D, I=$1000, G=$800, T=$1000, NX=$-200, where the dollar amounts are in millions of dollars, equilibrium income (in millions) is:
A. $12,000
B. $15,000
C. $16,500
D. $19,000
E. None of the above

GPT 3.5 · Answer

First, we need to find the equilibrium income by setting Y = C + I + G + NX.

Y = C + I + G + NX
Y = $5000 + 0.6Y - $1000 + $1000 + $800 - $200
Y = $5000 + 0.6Y + $800

Subtract 0.6Y from both sides:

0.4Y = $5800
Y = $5800 / 0.4
Y = $14,500

Therefore, the equilibrium income is $14,500 million, so the answer is:
E. None of the above