Consider the following economyC=1000+0.4(Y-T)I=500T=400G=300What is the consumption of equilibrium?

To find the consumption at equilibrium, we need to first determine the level of income (Y) at which aggregate demand equals aggregate supply. In this case, aggregate demand is represented by C + I + G, and aggregate supply is represented by Y.

Given the following equations: C = 1000 + 0.4(Y - T) I = 500 T = 400 G = 300

We can substitute the values of T and G into the equation for C: C = 1000 + 0.4(Y - 400)

Next, we substitute the equation for C into the equation for aggregate demand: Y = C + I + G Y = (1000 + 0.4(Y - 400)) + 500 + 300

Simplifying the equation: Y = 1000 + 0.4Y - 160 + 500 + 300 Y = 0.4Y + 1640

To solve for Y, we subtract 0.4Y from both sides: 0.6Y = 1640

Dividing both sides by 0.6: Y = 2733.33

Now that we have the level of income at equilibrium (Y), we can substitute it back into the equation for consumption to find the consumption at equilibrium: C = 1000 + 0.4(Y - T) C = 1000 + 0.4(2733.33 - 400) C = 1000 + 0.4(2333.33) C = 1000 + 933.33 C = 1933.33

Therefore, the consumption at equilibrium is 1933.33.