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Equilibrium Income

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Suppose that the aggregate consumption function is C = 100 + 0.80(Y - T),
taxes are T = 10 + .05Y, imports are M = 5 + 0.10Y, investment is $400, government
expenditures are $200, and exports are $100.

Part a - Calculate Equilibrium Income (Y)
Part b - Calculate Consumption (C)
Part c - Calculate Taxes (T)
Part d - Calculate Net Imports (X - M)

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Solution Summary

Equilibrium Income is assessed.

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Part a - Calculate Equilibrium Income (Y)
Write C = 100 + 0.80(Y - T)= 100 + 0.80(Y -10 + .05Y)= 100 + 0.84Y-8
C= 92+ 0.84Y
At the ...

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