Questions Chapter 3 - Auckland

1 a Find the equilibrium level of GDP in an economy in which investment is always 200 and the consumption function is described by the following algebraic equation: . C = 120 + 0.6Y. Note that this is a two-sector economy. Equilibrium level of income is given by. A = I + a = 200 + 120 = 320 = 800. b Do the same for an economy in which investment is fixed at 150 and the consumption function is: ................
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