ADVANCED ANALYSIS Assume that the consumption schedule for a private closed economy is such that consumption is: C=100+ 0.75Y Assume further that planned investment Ig is independent of the level of real GDP and constant at lg = 50. Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate expenditures: Y=C+Ig Instructions: Enter your answers as whole numbers. a. Calculate the equilibrium level of income or real GDP for this economy. Equilibrium GDP (Y) = $ b. What happens to equilibrium GDP if Ig changes to 60? Equilibrium GDP (Y) = $
ADVANCED ANALYSIS Assume that the consumption schedule for a private closed economy is such that consumption is: C=100+ 0.75Y Assume further that planned investment Ig is independent of the level of real GDP and constant at lg = 50. Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate expenditures: Y=C+Ig Instructions: Enter your answers as whole numbers. a. Calculate the equilibrium level of income or real GDP for this economy. Equilibrium GDP (Y) = $ b. What happens to equilibrium GDP if Ig changes to 60? Equilibrium GDP (Y) = $
Chapter1: Making Economics Decisions
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Please help me answer questions A and B. Thank you so much.
![**Advanced Analysis in Macroeconomics**
*Understanding Consumption and Investment in a Private Closed Economy*
In this advanced analysis, we assume that the consumption schedule for a private closed economy is modeled by the equation:
\[ C = 100 + 0.75Y \]
Here, \( C \) represents consumption and \( Y \) is the real GDP.
Additionally, assume that the planned investment \( I_g \) is independent of the level of real GDP and is constant at:
\[ I_g = 50 \]
It's important to recognize that in equilibrium, the real output produced (\( Y \)) equals aggregate expenditures.
The aggregate expenditure equation is given by:
\[ Y = C + I_g \]
### Instructions:
Enter your answers as whole numbers.
### Application of the Theory:
a. **Calculate the equilibrium level of income or real GDP for this economy.**
\[ \text{Equilibrium GDP (Y)} = \$ \_\_\_\_\_\_ \]
b. **What happens to equilibrium GDP if \( I_g \) changes to 60?**
\[ \text{Equilibrium GDP (Y)} = \$ \_\_\_\_\_\_ \]
By working through these calculations, students will gain a deeper understanding of how consumption and investment influence GDP within a closed economy framework.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdbf8765a-c0ab-46fe-8663-61e338d72b7c%2F60e98061-acb0-4e1a-acd2-5c7df8ab16ca%2F0d04qyd_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Advanced Analysis in Macroeconomics**
*Understanding Consumption and Investment in a Private Closed Economy*
In this advanced analysis, we assume that the consumption schedule for a private closed economy is modeled by the equation:
\[ C = 100 + 0.75Y \]
Here, \( C \) represents consumption and \( Y \) is the real GDP.
Additionally, assume that the planned investment \( I_g \) is independent of the level of real GDP and is constant at:
\[ I_g = 50 \]
It's important to recognize that in equilibrium, the real output produced (\( Y \)) equals aggregate expenditures.
The aggregate expenditure equation is given by:
\[ Y = C + I_g \]
### Instructions:
Enter your answers as whole numbers.
### Application of the Theory:
a. **Calculate the equilibrium level of income or real GDP for this economy.**
\[ \text{Equilibrium GDP (Y)} = \$ \_\_\_\_\_\_ \]
b. **What happens to equilibrium GDP if \( I_g \) changes to 60?**
\[ \text{Equilibrium GDP (Y)} = \$ \_\_\_\_\_\_ \]
By working through these calculations, students will gain a deeper understanding of how consumption and investment influence GDP within a closed economy framework.
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