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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.