Question
I am looking to see how the value of equilibrium output (Y ) and value of equilibrium consumption (C) is determined. Below is the formula
I am looking to see how the value of equilibrium output (Y) and value of equilibrium consumption (C) is determined. Below is the formula given.
1) C = a0+ a1(Y-T) + a2(WSM) + a3(WRE) + a4(CC) + a5(r)
1') C = a0+ a1(Y-200) + a2(10,000) + a3(15,000) + a4(120) + a5(3)
1'') C = a0+ a1(Y-200) + a2(12,000) + a3(15,000) + a4(160) + a5(3)
2) I = b0+ b1AS + b2CF + b3(r)
2') I = b0+ b1(140) + b2(1500) + b3(3)
2') I = b0+ b1(180) + b2(2000) + b3(3)
3) G = G
3') G = 200
4) X-M = X-M
4') X-M = -200
4') X-M = -400
5) AE = C + I + G + X-M
Where: a0= 50, a1= .80, a2= .05, a3= .10, a4= .5, a5= -400, b0= 100, b1= .5, b2= .2, b3= -50
Consumption Function = 750+.8Y
Investment = 320
AE = 1070+.8Y
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