In a certain economy consumption (C) is given as; C = 10,000 + 0.7Y
I = 10,000 where G = Government spending
G = 5,000 X = Exports
X = 6,000 T = Tax
T = 4,000 M= Imports
M = 8,000 I = Investment
Required;
- Find the equilibrium income using E = Y
- Find the equilibrium using injections (J) = withdrawals (W)
- By how much would income (Y) change if investment is increased by 2,000