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Consumption, investment, and government spending and tax revenues are given by the following information: C = 100 + 0.5Yd G = 100 T = 50 I = 100 What is saving in the US economy at the equilibrium level of output in the US economy? (Make sure you show all calculations!)

Respuesta :

Answer:

Savings = Y-C

But Y = C + I + G

C = G + byd ; 100+ 0.5yd

Yd = Y-T

T = 50

I = 100

G = 100

Y = 100 + 0.5(y-50) + 100 +100

Y = 100 + 0.5y - 25 +200

Y = 300- 25 + 0.5y

Y-0.5y = 275

Y(1-0.5) = 275

Y(0.5) = 275

Y = 275/0.5

Y= 550

But Y = C + S

So, S = Y - C

Y- C = 550 - ( 100+0.5yd)= S

Y- C = 550- ( 100+0.5(Y-50) =S

Y- C = 550 -( 100+0.5y-25) =S

Y- C = 550 - ( 100+0.5y -25) = S

Since Y = 550

Y-C = 550 - ( 100+0.5( 550) -25) = S

Y-C = 550 - ( 100 + 275 - 25) = S

Y- C = 550 -100-275+25= S

Y-C = 550 -350 =S

Y- C = 200 = S

Y-C = Savings = S = 200

Therefore, savings at the equilibrium level of output is 200

The saving in the US economy should be 100.

Calculation of the saving:

Y = C + I + G

Y = 100 + 0.5(Y - T) + 100 +  100

Y = 100 + 0.5(Y - 50) + 200

Y = 300 + 0.5y - 25

0.5Y = 275

Y = 550

At the equilibrium point, the saving should be 100

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