Government purchases are fixed at 1300 and taxes are fixed

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Consider an economy in which the consumption function takes the following simple algebraic form c = 300+0.75DI, and in which investment (I) is always 900 to 1,100 and net exports are always 100. Government purchases are fixed at 1,300 and taxes are fixed at 1,200. Find the equilibrium GDP. (Hint: Remember that disposable income is GDP minus taxes: DI = Y - T = Y - 1,200.)

Reference no: EM13392590

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