Questions
Numerical
An open economy, with government, is characterized by the following equations - C = 100 + 0.75Yd ; where C is consumption and Yd is disposable income I = 250 ; where I is investments G = 75 ; where G is government expenditures T = 50 ; where T is taxes X = 100 ; where X is exports M = 0.3Y ; where M is imports and Y is income Find the equilibrium output (Y) in the economy.
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To begin, restate the problem in my own words and identify the key relationships: in this open economy with government, output Y must satisfy the national income identity Y = C + I + G + (X − M).
First, compute disposable income Yd from Y and taxes T: Yd = Y − T = Y − 50.......Login to view full explanationLog in for full answers
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