Question
Economics Question on Business and Economy
The following data of an economy is given:
Consumption function C = 300 +0.8(1-t)Y;
Investment Function I = 900-50i;
Government expenditure G = 800;
Marginal tax rate t = 0.25
The IS equation corresponding to the above is:
A
Y=5000+ 125i
B
Y=5000-125i
C
Y=4250-125i
D
Y=4250+125i
Answer
Y=5000-125i
Explanation
Solution
The correct option is(B): Y=5000-125i