Answered: 1. Find Equilibrium output/ national…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Q1. Find Equilibrium output/ national income with given following

C = 140 + 0.9 (Yd)

This is the consumption function where 140 is autonomous consumption, 0.9 is the marginal propensity to consume, and Yd is disposable (i.e. after tax income).

Yd = Y- T, where Y is national income (or GDP) and T = Tax Revenues = 0.3Y; note that 0.3 is the average income tax rate.

I = Investment = 400

G = Government spending = 800

X = Exports = 600

M = Imports = 0.15Y

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