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B) Given Y= C Y G, C = C0 b Y I = I0 and G = G0 where C0 = 135, (i) Find the equation for the equilibrium level of income in the reduced form. (ii) Solve for the equilibrium level of income.?
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B) Given Y= C Y G, C = C0 b Y I = I0 and G = G0 where C0 = 135, ...
Equilibrium Level of Income
Equilibrium equation:
The equilibrium level of income (Y) can be found by setting Y equal to its own value in the equation Y = C + I + G.
Reduced form equation:
Substitute the given values of C, I, and G into the equation to get the reduced form:
Y = C0 + bY + I0 + G0
Solving for equilibrium level of income:
To solve for the equilibrium level of income, rearrange the reduced form equation to isolate Y on one side:
Y = C0 + I0 + G0 / (1 - b)
Detailed explanation:
- Plug in the values of C0, I0, G0, and b into the equation.
- Perform the necessary calculations to determine the equilibrium level of income.
- The equilibrium level of income is the value at which aggregate demand equals aggregate supply in an economy, leading to a stable macroeconomic equilibrium.
In conclusion, the equilibrium level of income can be calculated using the reduced form equation by plugging in the given values and solving for Y. This provides insight into the level of economic activity that corresponds to a balance between consumption, investment, and government spending in the economy.
Equilibrium equation:
The equilibrium level of income (Y) can be found by setting Y equal to its own value in the equation Y = C + I + G.
Reduced form equation:
Substitute the given values of C, I, and G into the equation to get the reduced form:
Y = C0 + bY + I0 + G0
Solving for equilibrium level of income:
To solve for the equilibrium level of income, rearrange the reduced form equation to isolate Y on one side:
Y = C0 + I0 + G0 / (1 - b)
Detailed explanation:
- Plug in the values of C0, I0, G0, and b into the equation.
- Perform the necessary calculations to determine the equilibrium level of income.
- The equilibrium level of income is the value at which aggregate demand equals aggregate supply in an economy, leading to a stable macroeconomic equilibrium.
In conclusion, the equilibrium level of income can be calculated using the reduced form equation by plugging in the given values and solving for Y. This provides insight into the level of economic activity that corresponds to a balance between consumption, investment, and government spending in the economy.
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B) Given Y= C Y G, C = C0 b Y I = I0 and G = G0 where C0 = 135, (i) Find the equation for the equilibrium level of income in the reduced form. (ii) Solve for the equilibrium level of income.?
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B) Given Y= C Y G, C = C0 b Y I = I0 and G = G0 where C0 = 135, (i) Find the equation for the equilibrium level of income in the reduced form. (ii) Solve for the equilibrium level of income.? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about B) Given Y= C Y G, C = C0 b Y I = I0 and G = G0 where C0 = 135, (i) Find the equation for the equilibrium level of income in the reduced form. (ii) Solve for the equilibrium level of income.? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for B) Given Y= C Y G, C = C0 b Y I = I0 and G = G0 where C0 = 135, (i) Find the equation for the equilibrium level of income in the reduced form. (ii) Solve for the equilibrium level of income.?.
B) Given Y= C Y G, C = C0 b Y I = I0 and G = G0 where C0 = 135, (i) Find the equation for the equilibrium level of income in the reduced form. (ii) Solve for the equilibrium level of income.? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about B) Given Y= C Y G, C = C0 b Y I = I0 and G = G0 where C0 = 135, (i) Find the equation for the equilibrium level of income in the reduced form. (ii) Solve for the equilibrium level of income.? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for B) Given Y= C Y G, C = C0 b Y I = I0 and G = G0 where C0 = 135, (i) Find the equation for the equilibrium level of income in the reduced form. (ii) Solve for the equilibrium level of income.?.
Solutions for B) Given Y= C Y G, C = C0 b Y I = I0 and G = G0 where C0 = 135, (i) Find the equation for the equilibrium level of income in the reduced form. (ii) Solve for the equilibrium level of income.? in English & in Hindi are available as part of our courses for UPSC.
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