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.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter4: The Aggregate Economy

Section: Chapter Questions

Problem 5E

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