Question
A simple macroeconomic system is described below. Assuming the system follows the aggregate expenditures model, please answer the questions that follow. C = Co +
A simple macroeconomic system is described below. Assuming the system follows the aggregate expenditures model, please answer the questions that follow.
C Co cYa
Co
Ya Y NT
NT tY
Go
M IMo mY
IMo
m
C consumption expenditure
Co autonomous consumption expenditure
c marginal propensity to consume MPC
Ya disposable income
NT net taxes
t tax rate
lo investment expenditure
Go government expenditure
Xo exports
IM imports
IMo autonomous imports
m marginal propensity to import MPM
Y real GDPincome
Calculate the equilibrium level of income. Keep as much precision as possible during your calculations. Your final answer should be accurate to the nearest dollar.
Equilibrium SO
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