If S = -60 +

Economics Apr 19, 2021

If S = -60 + .25Y and Ig = 60, where S is saving, Ig is gross investment, and Y is gross domestic product (GDP), then the equilibrium level of GDP is:46)
A) $360 B) $320 C) $200 D) $480

Expert Solution

Answer

D )

Explanation

Computation of Equilibrium Level of GDP:

Given,

S = -60 + 0.25Y

I_g= 60

At equilibrium,

S = I

So,

-60 + .25Y = 60

.25Y = 60+60

Y = 120/.25

Y = 480

So, Equilibrium Level of GDP is 480.

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