Question

Suppose that the economy is characterized by the following behavioral equations:



C= 170 + 0.7YD
I= 170
G= 150
T= 100

a. What does equilibrium output equal?
Y=?
b. What does total demand equal?

Z=?
c. Total demand is (greater than/equal to/ less than) production.

Answer 1

Answer:

1a. 1400 1b.1230 1c. Equal to

Explanation:

C= 170+0.7(yd)

Y= C+I+G

 =170+0.7(Y-100)+170+150

 =170+0.7Y-70+170+150

Y   =1400

Z=170+0.7(1400-100)+170+150

  =170+910+170+150

  =1400

It is equal as evident above