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Planned Investment
Nheath
Nov 12, 2007, 07:35 PM
How do you solve Y=C(Y-T)+I+G when:
Y=C+I+G
C=C(Y-T)=125+0.75(Y-T)
I=200+10r
G=150
T=100
terryg752
Nov 12, 2007, 10:43 PM
C=C(Y-T)
Hence Y - T = 1 (or C = 0)
Taking Y - T = 1 (You may also get a second solution by taking C = 0)
Y - 100 = 1
Y = 101
C = 125+ 0.75 = 125.75
Y = C + I + G
101 = 125.75 + I + 150
I = - 174.75
200 + 10r = -174.75
10r = -374.75
r = -37.475
Etc.