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Consider the macroeconomic model:
Y = C + I ----- (2)
C = a + b√Y -----(3)
Here: Y is national income, I is fixed investment that does not depend upon C or Y,and a > 0 and b > 0 are parameters. C stands for total consumption by all agents in the economy and, as can be seen from the second equation above, depends upon the level of national income.
(a) Solve for Y. This is called the equilibrium level of income in the economy
Hint: It might help if you define Z = √Y so that Z^2 = Y. You should end up with a quadratic equation to solve.
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