Assume the economy is closed and there is no government. The aggregate demand componentsare described below:C = 100 + 0.6YI = 200What is the consumption of equilibrium?

In a closed economy with no government, the equilibrium level of income (Y) is determined where aggregate demand equals aggregate supply. In this case, aggregate demand is the sum of consumption (C) and investment (I).

The consumption function is given as C = 100 + 0.6Y and investment is a fixed value of I = 200.

The aggregate demand (AD) is therefore AD = C + I = (100 + 0.6Y) + 200.

To find the equilibrium level of income, we set aggregate demand equal to aggregate supply. In a simple economy like this, aggregate supply is just the total income, or Y. So we have:

Y = AD Y = (100 + 0.6Y) + 200

Solving this equation for Y gives:

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

So the equilibrium level of income in this economy is 750.

Now, to find the equilibrium level of consumption, we substitute Y = 750 into the consumption function:

C = 100 + 0.6*750 C = 100 + 450 C = 550

So the equilibrium level of consumption in this economy is 550.

In a closed economy with no government, the equilibrium level of income (Y) is determined where aggregate demand equals aggregate supply. In this case, aggregate demand is the sum of consumption (C) and investment (I).

The consumption function is given as C = 100 + 0.6Y, and investment is a fixed value of 200.

To find the equilibrium level of income, we set aggregate demand equal to aggregate supply (Y):

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

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

First, simplify the equation:

Y = 300 + 0.6Y

Then, subtract 0.6Y from both sides to isolate Y on one side of the equation:

0.4Y = 300

Finally, divide both sides by 0.4 to solve for Y:

Y = 300 / 0.4 Y = 750

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

To find the equilibrium level of consumption, substitute Y = 750 into the consumption function:

C = 100 + 0.6 * 750 C = 100 + 450 C = 550

So, the equilibrium level of consumption in this economy is 550.