What is the level of consumer expenditures in equilibrium

Reference no: EM13238574

Use the following set of equations to answer the following questions where P is the price level: C= Co + 0.9DI
Co= 100-0.6P
T= 10
I= 25
G= 22
X= 5
IM= 2+ 0.08Y

a) If P= 10, what is the value of Co? What is the equilibrium of GDP? What is the level of consumer expenditures in equilibrium?

b) Leaving P as a variable, solve for equilibrium Y as a function of the price level

c) Draw the aggregate demand curve, where P is on the y-axis and Y is on the x-axis. Label its y-intecept and slope.

d) If the aggregate supply curve is described by the equation P= 1/5Y + 30, what are the equilibrium levels of GDP and prices?

e) confirm that the total expenditures in the economy equals the national income at the equilibrium levels of GDP and prices that you found in part (d)

Reference no: EM13238574

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