Suppose that the economy is characterized by the following b

Suppose that the economy is characterized by the following behavioral equations:

C =150 + 0.6YD

I = 150

G = 150

T = 100

Equilibrium GDP (Y)=

Solution

Answer-

TD = Y - T

TD = Y - 100

In equilibrium, Y = C + I + G

Y = 150 + 0.6(Y - 100) + 150 + 150

Y = 450 + 0.6Y - 60

(1 - 0.6)Y = 390

0.4Y = 390

Y = 975