Question
Consider a simple economy in which whole investment is constant and equal to $50 billion. There are no government or foreign sectors, and the price
Consider a simple economy in which whole investment is constant and equal to $50
billion. There are no government or foreign sectors, and the price level is constant. Assume that consumption behavior can be described as C = $40 billion + .8Y.
What is the equilibrium level of GDP in this model? Verify your answer by showing that savings equals investment in equilibrium (include a graph with your explanation please)
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Economics Principles and Policy
Authors: William Baumol, Alan Blinder
13th edition
1305280595, 1305280598, 9781305465626 , 978-1305280595
