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10 March, 20:06

You are given the following data concerning Freedonia, a legendary country: Consumption Function: C = 100 100 + 0.8 0.8Y Investment: I = 300 300 Aggregate Expenditure Function: AE = C + I Equilibrium: AE = Y Calculate the following: a. The level of equilibrium income, Y = nothing. (Enter your response as an integer.)

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  1. 10 March, 23:50
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    Answer: Y = 1400

    Explanation:

    AE = C+I

    Y = 300 + 0.8Y

    Y = 3000/2

    C = 1200 + 200

    C = 1400
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