10.00 points (Advanced Analysis) Assume the consumption schedule for a private o

Question

10.00 points (Advanced Analysis) Assume the consumption schedule for a private open economy is such that consumption is as follows C= 50 + 80 Y Assume further that planned investment Ig and net exports Xn are independent of the level of real GDP and constant at a 30 Xy 10 Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate expenditures: -c + ·Xy a-1. Calculate the equilibrium level of income or real GDP for this economy?$ a-2. Check your work by expressing the consumption, investment, and net export schedules in tabular form and determining the equilibrium GDP 450 Aggregate expenditures Real GDP 30 30 30 30 30 30 30 30 30 30 10 10 10 10 10 10 10 10 10 10 410

Explanation / Answer

Answer

a1)

mathematically the equilibrium RGDP is
Y=C+I+X
Y=50+0.8Y+30+10
0.2Y=90
Y=450

a2)

by comparing AE=RGDP from table also we can find that equilibrium Y is $450

RGDP C I X AE 300 290 30 10 330 350 330 30 10 370 400 370 30 10 410 450 410 30 10 450 500 450 30 10 490 550 490 30 10 530 600 530 30 10 570 650 570 30 10 610 700 610 30 10 650 750 650 30 10 690

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