Essay
Assume a two sector economy where C = $100 + .9Y and I = $50. Calculate the equilibrium level of output for this hypothetical economy. What would the level of consumption be if the economy were operating at 1400? What would be the amount of unplanned investment at this level? In which direction would you expect the economy to move to at $1400 and why?
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Equilibrium in a two sector economy is w...View Answer
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