Need help with question 8 for 2003 Economics HSC paper (question inside) (1 Viewer)

[chrome]

What is the equilibrium level of income if C = 100 + 0.8Y and I=40?
a) 100
b) 140
c) 500
d) 700

rather than just stating the correct response, an explaination would be a help

 

[AGB]

for this question you need to use the equation Y = C + I

its pretty straight forward from there...

Y = C + 40
Y = (100 + 0.8Y) + 40

then its just maths...

Y = 140 + 0.8Y
Y - 0.8Y = 140
Y(1 - 0.8) = 140
Y(0.2) = 140

:. Y = 140/0.2
= 700

Therefore, the answer is D, 700

 

[overwhelming]

Originally posted by chrome
What is the equilibrium level of income if C = 100 + 0.8Y and I=40?
a) 100
b) 140
c) 500
d) 700

rather than just stating the correct response, an explaination would be a help

omg economics HSC exam looks so easy :| That is basically year 8 maths :S