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Y = C + I + G + X - M gives the national income model. Where C stands for Consumption. I stands for investment.

Y = C + I + G + X - M gives the national income model.

Where C stands for Consumption.

I stands for investment.

G stands for government spending.

X stands for exports.

M for Important

There are certain endogenous factors that change the equation as follows:

Y = a - b (Y - T0) + I + gY + X - M

Let C = 100 + 0.75YD

T = -80 + 0.2Y

I equals 300.

G is equal to 330

Solving,

Y = 110 + 0.75 [Y - (-80 + 0.2Y) + 300 + 330

Y = 740 + 0.75 (0.8Y + 80)

740 + 0.6Y + 60 = Y

800 = Y - 0.6Y

The national income of the United States is Y* = 800/0.4 = 2000.

Task: Please solve for all endogenous variables to ensure the calibrated model is a match. Show all work.

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