Consider a closed economy that is described by the following equations:
C=100+0.8(Y-T)
T=50+0.5Y
Ip=100
G=140
The current level of output (Y) in the economy is equal to 1,500. What will happen in this economy?

Question

Consider a closed economy that is described by the following equations: 
 C=100+0.8(Y-T) 
 T=50+0.5Y 
 Ip=100 
 G=140 
 The current level of output (Y) in the economy is equal to 1,500. What will happen in this economy?

Answer

The business sector will experience an unplanned increase in their level of inventories and this will provide a signal to business to cut back on their level of production.

Answer

The economy is at equilibrium so nothing will happen.

Answer

The business sector will experience an unplanned decrease in their level of inventories and this will provide a signal to business to cut back on their level of production.

Answer

The business sector will experience an unplanned increase in their level of inventories and this will provide a signal to business to increase their level of production.

Answer

The business sector will experience an unplanned decrease in their level of inventories and this will provide a signal to business to increase their level of production.

Crowdly

Consider a closed economy that is described by the following equations: C=100+...

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