Question #24339

How do I calculate equilibrium national income when given T? For example: C=150+0.9yD yD=.8y I=400 T=0.2y G=700 X=130 IM=0.08y

Expert's answer

The level of equilibrium national income Ye = C + I + G + (X - IM) ,

where C= Consumer spending, I = Investment (Gross fixed Capital

Formation), G= Government Spending, X= Exports and IM= Imports.

Disposable income ( Yd ) is calculated as the difference between personal

income (Y) and personal tax and non tax payments (T).

Y = C + I + G + (X - IM)

Yd= Y - T

Y=150+0.9(Y-T)+400+700+130-0.08Y

Y=150+0.72Y+400+700+130-0.08Y

0,36Y=1 380

Ye=3 833 (the level of equilibrium national income)

where C= Consumer spending, I = Investment (Gross fixed Capital

Formation), G= Government Spending, X= Exports and IM= Imports.

Disposable income ( Yd ) is calculated as the difference between personal

income (Y) and personal tax and non tax payments (T).

Y = C + I + G + (X - IM)

Yd= Y - T

Y=150+0.9(Y-T)+400+700+130-0.08Y

Y=150+0.72Y+400+700+130-0.08Y

0,36Y=1 380

Ye=3 833 (the level of equilibrium national income)

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