2. For the economy in the last problem above: (a) Assume that output is equal to 900. Compute total demand. Is it equal to output? Explain. (b) Assume that output is equal to 1000. Compute total demand. Is it equal to output? Explain. (c) Assume output is equal to 1000. Compute private saving. Is it equal to investment? Explain.
1. Suppose that the economy is characterized by the following equations: C = 160+ 0.6YD, i 150, G 150, and T 100. Solve for (a) equilibrium GDP (Y), (b) disposable income (YD), and (c) consumption spending (C). 2. For the economy in the last problem above: (a) Assume that output is equal to 900. Compute total demand. Is it equal to output? Explain. (b) Assume that output is equal to 1000. Compute total demand. Is it equal to output? Explain. (c) Assume output is equal to 1000. Compute private saving. Is it equal to investment? Explain.