Short Run

Show demand formula (components) for a closed economy case:

A) Consider the following demand components:

Consumption is described as the following: 120 million USD as an autonomous level of consumption plus 80% of disposable income spends on consumption.

I = 50

G=10

T= 25

B) Assuming goods market equilibrium, show equilibrium level of output in this economy

C) How much output increase, if G increase from 10 to 20, show your calculations