(Answered) Poblemin the aggregate demand model in equilibrium gdp y

Economics

Problem:

In the aggregate demand model in equilibrium, GDP (Y) = C + I + X (open economy).
Where C = consumption schedule = 100 + .75Y (consumption is a function of income).
Where I = planned investment = 20 and X = net exports = 40. Both are independent of GDP (Y).

Use the information provided above to complete the following:

Calculate the equilibrium level of income or real GDP for this economy.
What happens to equilibrium Y if Ig changes to 15?
What does this outcome reveal about the size of the multiplier?
Can there be equilibrium level of output at below full employment?

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Macroeconomics, Economics

Category:- Macroeconomics
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