Problem 1 Suppose the system of aggregate expenditures can be described by the following relationships and parameter values. C(Y – T) = 1200 + 0.8(Y – T') I(r) = 100 – 3r G = 200 ;T = 200; r = 5; Ex = Im = 0 %3D 1. In the consumption function, 1200 represents the portion of consumption that is not dependent on disposable income. Suppose something causes households to become concerned about their economic futures and this autonomous consumption falls to 1100. Find the new equilibrium level of Y (output/income).
Problem 1 Suppose the system of aggregate expenditures can be described by the following relationships and parameter values. C(Y – T) = 1200 + 0.8(Y – T') I(r) = 100 – 3r G = 200 ;T = 200; r = 5; Ex = Im = 0 %3D 1. In the consumption function, 1200 represents the portion of consumption that is not dependent on disposable income. Suppose something causes households to become concerned about their economic futures and this autonomous consumption falls to 1100. Find the new equilibrium level of Y (output/income).
Chapter1: Making Economics Decisions
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![Problem 1
Suppose the system of aggregate expenditures can be described by the following relationships and
parameter values.
C(Y – T) = 1200 + 0.8(Y – T)
I(r) = 100 – 3r
G = 200;T = 200; r = 5; Ex = Im = 0
1. In the consumption function, 1200 represents the portion of consumption that is not
dependent on disposable income. Suppose something causes households to become
concerned about their economic futures and this autonomous consumption falls to 1100.
Find the new equilibrium level of Y (output/income).](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6088d756-ca59-4126-9760-49ea1181c855%2Fd9e1fe91-3578-4784-aed0-15e5d89999ff%2Fmnqhwai_processed.png&w=3840&q=75)
Transcribed Image Text:Problem 1
Suppose the system of aggregate expenditures can be described by the following relationships and
parameter values.
C(Y – T) = 1200 + 0.8(Y – T)
I(r) = 100 – 3r
G = 200;T = 200; r = 5; Ex = Im = 0
1. In the consumption function, 1200 represents the portion of consumption that is not
dependent on disposable income. Suppose something causes households to become
concerned about their economic futures and this autonomous consumption falls to 1100.
Find the new equilibrium level of Y (output/income).
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