E=C+I+G+NX [Aggregate demand is the total of consumption, investment, government purchases, and net exports.] E=Y* [In equilibrium, total spending matches total income or total output.] Calculate the equilibrium level of GDP for this economy (Y*).7 May 2018
How do you calculate the equilibrium level of GDP?
Most simply, the formula for the equilibrium level of income is when aggregate supply (AS) is equal to aggregate demand (AD), where AS = AD. Adding a little complexity, the formula becomes Y = C + I + G, where Y is aggregate income, C is consumption, I is investment expenditure, and G is government expenditure.
What is the equilibrium GDP?
The equilibrium output of such an economy is that level of output at which the total amount of planned spending is just equal to the amount produced, or GDP. That is, equilibrium GDP = C + Ig. Consumption expenditures rise with GDP while planned gross investment expenditures are independent of the level of GDP.
How do you calculate GDP tax?
GDP Based on Spending
This approach can be calculated using the following formula: GDP = C + G + I + NX, or (consumption + government spending + investment + net exports). All these activities contribute to the GDP of a country. The U.S. GDP is primarily measured based on the expenditure approach.27 Jun 2019
How do you calculate consumption?
In short, consumption equation C = C + bY shows that consumption (C) at a given level of income (Y) is equal to autonomous consumption (C) + b times of given level of income. ADVERTISEMENTS: Calculate consumption level for Y = Rs 1,000 crores if consumption function is C = 300 + 0.5Y.