Question

C = 50 + 0.9Y Assume further that planned investment Ig, government spending G and net exports Xn are independent of the level of income. Ig = 30, G = 0 and Xn = 10. Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate expenditures Y = C + Ig + G + Xn

Answer 1

Answer: Hence, the value of real output produced Y = 900.

Explanation:

Since we have given that

`Y=C+I_g+G+Xn------------(1)`

and

`C=50+0.9Y-----------------(2)`

And

`I_g=30\\\\G=0\\\\X_n=10`

We need to find the value of Y:

From eq(1) and eq(2), we get that

`Y=50+0.9Y+I_g+G+X_n\\\\Y-0.9Y=50+30+0+10\\\\0.1Y=90\\\\Y=(90)/(0.1)\\\\Y=900`

Hence, the value of real output produced Y = 900.