macroeconomics

a) Suppose the economy is characterized by the following behavioral equations:

C = c0 + c1YD
YD = Y – T
I = b0 + b1Y

Government spending is constant. Note that investment now increases with output. Chapter 5 will discuss the reasons for this relation. Solve for equilibrium output.

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asked by Eve
  1. Y=(I-b0)/b1

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