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In: Economics

closed economy without export or import I = $60 G = 140 T= 0.2 Y savings...

closed economy without export or import

I = $60 G = 140 T= 0.2 Y

savings function is = -100 + 0.25Y where Y= (Yd - T)

show numerically using these data that in equilibrium the sum of leakages equal the sum of injections?

Solutions

Expert Solution

Please refer to the image below for the solution. Here I found out that with the given information sum of leakages are not equal to the sum of Injections. And in the above information, it said that Y = Yd - T (it is wrong), if Yd is the disposable income then the relationship should be Yd = Y - T.

Rahul Sunny answered 2 years ago
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