An economy is described by the following equations G 2000

An economy is described by the following equations G = 2.000 + 0.3 (Y - T) - 10.000t t^P = 2,000 - 10,000t G = 1,000 NX = 100 T = 3.150 The real interest rate, expressed as a decimal, is 0.10 (that is, 10 percent). Find a numerical equation relating planned aggregate expenditure to output PAE = + Y. Using a table (or algebra if you have used the appendix to the chapter), solve for short-run equilibrium output

(a) PAE=C+I_P+G+NX

PAE=2600+0.8(Y-3150)-10000(0.10)+2000-10000(0.10)+1800+100

PAE=1980+0.8Y

(b)

Short run equilibrium output is at Y=PAE=9900

Y	PAE=1980+0.8Y	Y_PAE
9500	9580	Y<PAE
9600	9660	Y<PAE
9700	9740	Y<PAE
9800	9820	Y<PAE
9900	9900	Y=PAE
10000	9980	Y>PAE
10100	10060	Y>PAE
10200	10140	Y>PAE

An economy is described by the following equations G = 2.000 + 0.3 (Y - T) - 10.000t t^P = 2,000 - 10,000t G = 1,000 NX = 100 T = 3.150 The real interest rate,

An economy is described by the following equations G 2000

Solution

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