Calculate the equilibrium level of national income (Y) where Y = C + I + G; C = 100 + 0.75Y; I = 50; G = 200
Answer Details
To calculate the equilibrium level of national income (Y), we start with the equation Y = C + I + G.
In this equation, C represents consumption spending, I represents investment spending, and G represents government spending.
Now, let's substitute the given values into the equation:
C = 100 + 0.75Y
I = 50
G = 200
Substituting these values, we get:
Y = (100 + 0.75Y) + 50 + 200
To solve for Y, we need to simplify the equation:
Y = 100 + 0.75Y + 50 + 200
Combining like terms, we have:
Y = 350 + 0.75Y
Next, we can solve for Y by isolating it on one side of the equation. To do this, we can subtract 0.75Y from both sides:
Y - 0.75Y = 350
Simplifying further, we have:
0.25Y = 350
Finally, we can solve for Y by dividing both sides of the equation by 0.25:
Y = 350 / 0.25
Calculating this, we find:
Y = 1400
So, the equilibrium level of national income (Y) is 1400.