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24 January, 19:26

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

C = 170 + 0.7YD

I = 170

G = 150

T = 100

a. What does equilibrium output equal?

Y=?

b. What does total demand equal?

Z=?

c. Total demand is (greater than/equal to / less than) production.

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Answers (1)
  1. 24 January, 19:33
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    1a. 1400 1b. 1230 1c. Equal to

    Explanation:

    C = 170+0.7 (yd)

    Y = C+I+G

    =170+0.7 (Y-100) + 170+150

    =170+0.7Y-70+170+150

    Y = 1400

    Z=170+0.7 (1400-100) + 170+150

    =170+910+170+150

    =1400

    It is equal as evident above
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