In a simple economy (assume there are no taxes, thus Y is disposable income), the consumption function is: Upper C equals 200 plus 0.75 Upper Y. Investment is equal to 300. In this economy, equilibrium GDP is $ nothing. (Round your answer to the nearest dollar.)

$2,000

Explanation:

Given C = 200 + 0.75Y, and

I = 300

Where I denotes investment. In economics,

S = Y - C

Where S denotes saving. Therefore, we have:

S = Y - (200 + 0.75Y)

  = Y - 200 - 0.75Y

S = 0.25Y - 200

At equilibrium in an economy, S = I, we therefore equate S and I and solve for Y as follows:

0.25Y - 200 = 300

0.25Y = 300 + 200

0.25Y = 500

Y = 500/0.25 = $2,000

Therefore, equilibrium GDP is $2,000 in this economy.

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