Question

If the consumption function is C = 800+ 0.6(Y-T), output, Y, = $3,600 and net taxes, T, = $100, then consumption = $ 2900. (Round your response to the nearest whole number.) For the data in the following table, the consumption function is C= 800+ 0.6(Y-T). Fill in the columns in the table and identify the equilibrium output. Net Taxes Disposable Consumption Income Spending Output Planned Investment Spending $300 Planned Aggregate Expenditure Unplanned Inventory Change Government Purchases Saving $2,100 $100 $ $ $400 $ 2,600 100 300 400 3,100 100 300 400 3,600 100 300 400 4,100 100 300 400 4,600 100 n 300 400 5,100 100 300 400 The equilibrium output is

Answer 1

The consumption is $2900 and the equilibrium output is $3600.

Step-by-step explanation:

The consumption function is given by C = 800 + 0.6(Y-T). Using Y = $3,600 and T = $100, we can find the consumption as follows:

C = 800 + 0.6(3600 - 100) = 2900

Therefore, the consumption is $2900.

The equilibrium output is the level of output where planned aggregate expenditure (PAE) is equal to output (Y). In this case, PAE is given by planned investment spending ($300), government purchases ($400), and consumption ($2900), which sums up to $3600. Since planned aggregate expenditure is equal to output, the equilibrium output is $3600.