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Answer to Question #79155 in Macroeconomics for Bard

Question #79155
Given a hypothetical consumption function of the form:
Y = C + I0 + G0
C = α + β
Where: = Y – T
Y = Income
T = Taxes
Compute the equilibrium level of income and consumption (4 marks)
Expert's answer
If Y = C + I0 + G0, C = α + β(Y - T),
then the equilibrium level of income will be Y = α + β(Y - T) = I0 + G0 and consumption will be C = α + β(Y - T) = Y - I0 - G0

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