Question

Suppose that the economy is characterized by the following behavioral equations: C = 160 + 0.6Y_D I = 150 G = 150 T = 100 a. Solve for equilibrium output. Compute total demand. Is it equal to production? Explain. b. Assume that G is now equal to 110. Solve for equilibrium output. Compute total demand. Is it equal to production? Explain. c. Assume that G is equal to 110, so output is given by your answer to part b. Compute private plus public saving. Is the sum of private and public saving equal to investment? Explain. 

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

C = 160 + 0.6Y_D
I = 150
G = 150
T = 100

a. Solve for equilibrium output. Compute total demand. Is it equal to production? Explain.
b. Assume that G is now equal to 110. Solve for equilibrium output. Compute total demand. Is it equal to production? Explain.
c. Assume that G is equal to 110, so output is given by your answer to part b. Compute private plus public saving. Is the sum of
private and public saving equal to investment? Explain.
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Suppose that the economy is characterized by the following behavioral equations: C = 160 + 0.6YD I = 150 G = 150 T = 100 a. Solve for equilibrium output. Compute total demand. Is it equal to production? Explain. b. Assume that G is now equal to 110. Solve for equilibrium output. Compute total demand. Is it equal to production? Explain. c. Assume that G is equal to 110, so output is given by your answer to part b. Compute private plus public saving. Is the sum of private and public saving equal to investment? Explain.

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Principles of Economics
Principles of Economics
Gregory Mankiw 8th Edition
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Suppose that the economy is characterized by the following behavioral equations: C = 160 + 0.6YD I = 150 G = 150 T = 100 a. Solve for equilibrium output. Compute total demand. Is it equal to production? Explain. b. Assume that G is now equal to 110. Solve for equilibrium output. Compute total demand. Is it equal to production? Explain. c. Assume that G is equal to 110, so output is given by your answer to part b. Compute private plus public saving. Give me step by step work. Is the sum of private and public saving equal to investment? Explain.
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3. Use the economy described in Problem 2. a. Solve for equilibrium output. Compute total demand. Is it equal to production? Explain. b. Assume that G is now equal to 110. Solve for equilibrium output. Compute total demand. Is it equal to production? Explain. c. Assume that G is equal to 110, so output is given by your answer to part b. Compute private plus public saving. Is the sum of private and public saving equal to investment? Explain. C = 160 + 0.6YD I = 150 G = 150 T = 100

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Transcript

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0:00 Hello everyone.
00:01 So, as we know that y is equals to c plus i plus g and the values for each of them is given in this equation.
00:11 So, putting those values we get 160 plus 0 .6 yd plus 150 plus 150.
00:20 Now, further solving we get y is equals to 160 plus 0 .6 y minus 100 plus 300 yd that is equals to y minus t.
00:34 So, y is equals to 160 plus 0 .6 y minus 60 plus 300.
00:44 Now, y is equals to 400 plus 0 .6 y.
00:49 Now, substituting these values we get y minus 0 .6 y is equals to 400.
00:59 Now, y 1 minus 0 .6 is equals to 400.
01:05 Now, y is equals to 400 divided by 0 .4.
01:09 So, the final value of y is 1000.
01:15 Now, total demand will be equal to c plus i plus g.
01:28 So, it will be 160 plus 0 .6 multiplied by 1000 minus 100 plus 150 plus 150 that gives 1000.
01:44 So, we can conclude that y is equals to total demand.
01:52 Now, coming to next part of the question, coming to part b in which now g is equals to 110.
02:02 So, is equals to 160 plus 0 .6 y minus 100 plus 260.
02:11 So, y is equals to 360 plus 0 .6 y minus 60...
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