In a closed economy with no government, the equilibrium is where aggregate demand equals aggregate supply. Aggregate demand is the sum of consumption (C) and investment (I).

Given the consumption function C = 100 + 0.6Y and investment I = 200, aggregate demand (AD) is:

AD = C + I
AD = (100 + 0.6Y) + 200
AD = 300 + 0.6Y

In equilibrium, aggregate demand equals aggregate supply. In a simple economy like this, aggregate supply is just the total output, which is income (Y). So, we set AD = Y:

300 + 0.6Y = Y

Solving this equation for Y gives us the equilibrium level of income.

0.4Y = 300
Y = 300 / 0.4
Y = 750

So, the equilibrium level of income (Y) in this economy is 750.

The investment of equilibrium in this case is a fixed value, given by equation (2), which is 200. This means that at the equilibrium level of income, the level of investment is 200.

Question

In a closed economy with no government, the equilibrium is where aggregate demand equals aggregate supply. Aggregate demand is the sum of consumption (C) and investment (I).

Given the consumption function C = 100 + 0.6Y and investment I = 200, aggregate demand (AD) is:

AD = C + I
AD = (100 + 0.6Y) + 200
AD = 300 + 0.6Y

In equilibrium, aggregate demand equals aggregate supply. In a simple economy like this, aggregate supply is just the total output, which is income (Y). So, we set AD = Y:

300 + 0.6Y = Y

Solving this equation for Y gives us the equilibrium level of income.

0.4Y = 300
Y = 300 / 0.4
Y = 750

So, the equilibrium level of income (Y) in this economy is 750.

The investment of equilibrium in this case is a fixed value, given by equation (2), which is 200. This means that at the equilibrium level of income, the level of investment is 200.

Knowee AI · Accepted Answer

In a closed economy with no government, the equilibrium is where aggregate demand equals aggregate supply. Aggregate demand is the sum of consumption (C) and investment (I).

Given the consumption function C = 100 + 0.6Y and investment I = 200, aggregate demand (AD) is:

AD = C + I
AD = (100 + 0.6Y) + 200
AD = 300 + 0.6Y

In equilibrium, aggregate demand equals aggregate supply. In a simple economy like this, aggregate supply is just the total output, which is income (Y). So, we set AD = Y:

300 + 0.6Y = Y

Solving this equation for Y gives us the equilibrium level of income.

0.4Y = 300
Y = 300 / 0.4
Y = 750

So, the equilibrium level of income (Y) in this economy is 750.

The investment of equilibrium in this case is a fixed value, given by equation (2), which is 200. This means that at the equilibrium level of income, the level of investment is 200.

Assume the economy is closed and there is no government. The aggregate demand components are described below:C = 100 + 0.6Y (1)I = 200 (2)What is the investment of equilibrium?

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