1 answer

5 Suppose that a simple economy has the following parameters. C = 200+0.5Y 1 = 200...

Question:

5 Suppose that a simple economy has the following parameters. C = 200+0.5Y 1 = 200 a. Complete the following table. 0 100 200
5 Suppose that a simple economy has the following parameters. C = 200+0.5Y 1 = 200 a. Complete the following table. 0 100 200 300 400 500 600 700 800 900 1.000 b. The value of expenditures equilibrium Is SL 800 c. At the expenditures equilibrium, the value of Injections is $ 200 and the value of leakages is $ 200

Answers

a) C = 200 + 0.5Y , I = 200

AE = C + I and S = Y - C

Y C S I AE
0 200 -200 200 400
100 250 -150 200 450
200 300 -100 200 500
300 350 -50 200 550
400 400 0 200 600
500 450 50 200 650
600 500 100 200 700
700 550 150 200 750
800 600 200 200 800
900 650 250 200 850
1000 700 300 200 900

b) Since equilibrium occur at a where Y = AE.

here, Y= AE occur at Y = AE = 800. so value of equilibrium expenditure = $ 800

c) Value injected in economy = Y - S

= 800 - 200 = $ 600

Value of leakage = S = $ 200

  

.

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