,Suppose in a closed economy, government
spending is $60, business investments are $120 and...

Question

,Suppose in a closed economy, government
spending is $60, business investments are $120 and consumers’ spending is given
as C = XXXXXXXXXX85Y. What is the equilibrium level of output?

Robert · Accepted Answer

Suppose in a closed economy, government spending (G) is $60, business investments (I) are 
$120 and consumers’ spending is given as C = 120 + 0.85Y. What is the equilibrium level of 
output? 
Answer: 
At equilibrium, Y = C + I + G or 
Y = 120 + 0.85Y + 120+60 or 
Y = 300 + 0.85Y or 
0.

,Suppose in a closed economy, government spending is $60, business investments are $120 and consumers’ spending is given as C = XXXXXXXXXX85Y. What is the equilibrium level of output?

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