Consider the imaginary small country of Auyuittuq. Assume that Auyuittuq is closed to trade, so that its net exports are equa the economy is described by the following consumption function, where C is consumption, Y is income (real GDP), Ip is planned investment, G is government purchases, and T is taxes: C = $40 billion +0.5 x (Y-T) Suppose G = $115 billion, Ip = $50 billion, and T = $10 billion. Given the consumption function and the fact that, in a closed economy, planned expenditure can be calculated as Y=C+Ip+ G, the equilibrium income level is $ billion.

Consider the imaginary small country of Auyuittuq. Assume that Auyuittuq is closed to trade, so that its net exports are equa the economy is described by the following consumption function, where C is consumption, Y is income (real GDP), Ip is planned investment, G is government purchases, and T is taxes: C = $40 billion +0.5 x (Y-T) Suppose G = $115 billion, Ip = $50 billion, and T = $10 billion. Given the consumption function and the fact that, in a closed economy, planned expenditure can be calculated as Y=C+Ip+ G, the equilibrium income level is $ billion.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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