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Homework answers / question archive / The following equations refer to the goods market of an economy in billions of euros: C = 480 + 0

The following equations refer to the goods market of an economy in billions of euros: C = 480 + 0

Economics

The following equations refer to the goods market of an economy in billions of euros: C = 480 + 0.6Ya I = 130 T = 80 G = 200 
What is consumption at equilibrium? 0 o b.:50 o .:575 

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Goods Market Equilibrium is

Y = C + I + G

C = 480 + 0.6 YD

C = 480 + 0.6 (Y - T)

C = 480 + 0.6 (Y - 80)

C = 480 + 0.6 Y - 48

C = 432 + 0.6 Y

 

Y = 432 + 0.6 Y + 130 + 200

Y = 0.6 Y + 762

Y-0.6 Y = 762

0.4 Y = 762

Y = 762/0.4 = 1,905

 

Equilibrium Disposable Income (YD):

Equilibrium Disposable Income (YD) = Y - T

= 1,905 - 80

Equilibrium Disposable Income (YD) = 1,825

 

Consumption at Equilibrium (C):

Consumption at Equilibrium (C) = 480 + 0.6 YD

C = 480 + 0.6 * 1,825

C = 480 + 1,095

C = 1,575

So, Consumption at Equilibrium (C) is $1,575