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A country is closed. It has no government sector, and its aggregate price levels and interest rates are fixed. Furthermore, the marginal propensity to consume
A country is closed. It has no government sector, and its aggregate price levels and interest rates are fixed. Furthermore, the marginal propensity to consume is constant and the country's consumption function is as follows: C = 200 + 0.75 YD, where YD is disposable income and C is consumption. Assume that planned investment equals 75. What is the income-expenditure equilibrium for this country?
a. $200
b. $275
c. $1,100
d.$900
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