Question

C = 50 + 0.9Y Assume further that planned investment Ig, government spending G and net exports Xn are independent of the level of income. Ig = 30, G = 0 and Xn = 10. Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate expenditures Y = C + Ig + G + Xn

Answer 1

Answer: Hence, the value of real output produced Y = 900.

Step-by-step explanation:

Since we have given that

$Y=C+I_g+G+Xn------------(1)$

and

$C=50+0.9Y-----------------(2)$

And

$I_g=30\\\\G=0\\\\X_n=10$

We need to find the value of Y:

From eq(1) and eq(2), we get that

$Y=50+0.9Y+I_g+G+X_n\\\\Y-0.9Y=50+30+0+10\\\\0.1Y=90\\\\Y=\dfrac{90}{0.1}\\\\Y=900$

Hence, the value of real output produced Y = 900.