Output-consumption and investment

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Reference no: EM1314035

Assume a 2 sector economy (where the two sectors are consumption and investment) where C= $100+ 0.9 Y and I=$50

(i) Calculate the equilibrium level of output for this hypothetical economy.

(ii) What would be the level of consumption if economy is operating at income 1400?

(iii) What would be the unplanned investment at this level of income?

(iv) What would be the firms reaction regarding their production decisions when the output level is 1400?

Reference no: EM1314035

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