Consider the following model of a very simple economy. Household saving and investment behavior depend in part on wealth (accumulated savings and inheritance). In the late 1990's many were concerned with very large increase in stock value (a form of wealth) and it's possible effect on saving and investment.
The following consumption function incorporate wealth (W) as a determinant of consumption. We have the following information on consumption (C) and investment (I):
C=45+0.60Y+0.05W
I=100
W=800
We are ignoring the fact that saving adds to the stock of wealth.
Calculate the value of equilibrium Y, C, and savings (S). (Enter you responses as Integers.)
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