Consider a model of a goods market in a closed economy that is characterized by the following equations: Consumption : C = 160 + 0.6(Y −T ) Investment : I = 150 Taxes : T = 100 Government spending : G = 110 EQ Output : Y = 1/(1 −c1)[c0 + I + G −c1T] (a) Solve for the output in the economy. (b) Compute the sum of private and public saving. (c) Considering your answer to part b and the information given above, is this economy in equilib- rium? Explain.
Consider a model of a goods market in a closed economy that is characterized by the following equations: Consumption : C = 160 + 0.6(Y −T ) Investment : I = 150 Taxes : T = 100 Government spending : G = 110 EQ Output : Y = 1/(1 −c1)[c0 + I + G −c1T] (a) Solve for the output in the economy. (b) Compute the sum of private and public saving. (c) Considering your answer to part b and the information given above, is this economy in equilib- rium? Explain.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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1. Consider a model of a goods market in a closed economy that is characterized by the following
equations:
Consumption : C = 160 + 0.6(Y −T )
Investment : I = 150
Taxes : T = 100
Government spending : G = 110
EQ Output : Y = 1/(1 −c1)[c0 + I + G −c1T]
(a) Solve for the output in the economy.
(b) Compute the sum of private and
(c) Considering your answer to part b and the information given above, is this economy in equilib-
rium? Explain.
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