0:00
Hello everyone.
00:01
So, solving the first part of the question, that is to find the equilibrium level of output or income, y, we need to set equal, y equal to its own demand, which is given by y is equals to c plus i plus g plus x minus m.
00:25
So, it will be 300 plus 0 .75 y d plus 250 plus 250 plus 200 minus 0 .1 y.
00:43
Now, we can substitute the y d and t to get our value.
00:50
So, y is equals to 300 plus 0 .75 1 minus t y plus 250 plus 250 plus 200 minus 0 .1 y.
01:15
So, on solving this, we get final value of y as 1475.
01:20
Therefore, the equilibrium level of output or income is y is equals to 1475.
01:27
Coming to next part of the question, here we need to find the equilibrium level of consumption.
01:36
So, we can substitute y d into the consumption function.
01:41
So, c is equals to 300 plus 0 .75 y d.
01:52
So, 300 plus 0 .75 1 minus 0 .2 y.
02:01
So, we get c is equals to 360.
02:04
Therefore, the equilibrium level of consumption is 360.
02:14
Coming to third part of the question, to find the equilibrium level of imports, we can substitute y into the imports function.
02:23
So, m is equals to 0 .1 y.
02:27
So, 0 .1 multiplied by 1475.
02:31
We have already found the value of y above over here.
02:34
So, on solving this, we get m is equals to 14 .147 .5.
02:42
Therefore, the equilibrium level of imports is 147 .5.
02:52
Coming to fourth part, that is to find this budget surplus or deficit at the equilibrium.
03:01
So, we can use the formula that is budget surplus or deficit is equals to tax revenue minus government spending.
03:31
So, now tax revenue is equals to t y that is equals to 0 .2 multiplied by 1475.
03:48
So, tax revenue will be 295.
03:51
Similarly, government spending is equals to g is equals to 250.
04:04
So, now budget surplus or deficit is equals to 295 minus 250 that gives 45.
04:25
Therefore, the budget has a surplus of 45 units at the equilibrium.
04:35
Now, coming to fifth part of the question, that is the government spending multiplier...