Suppose that the economy is characterized by the following behavioralequations: C = 160 + 0.6YD, I = 150, G = 150, T = 100. Solve for equilibrium…

. Suppose that the economy is characterized by the following behavioralequations: C = 160 + 0.6YD, I = 150, G = 150, T = 100.Ã¢â‚¬Â¢
a. Solve for equilibrium output. Compute total demand. Is it equal toproduction? Explain.Ã¢â‚¬Â¢
b. Assume that G is now equal to 110. Solve for equilibrium output.Compute total demand. Is it equal to production? Explain.Ã¢â‚¬Â¢
c. AssumethatGisequalto110,so output is given by your answer to (b).Compute private plus public saving. Is the sum of private and publicsaving equal to investment? Explain.1
**Just short answer questions, do not need an essay for it.
(a) Y = C + I + GY = 160 + 0.6(Y-100) + 150 + 1500.4Y = 400Y* = 1000At equilibrium, total demand = 1000Total demand equals production because at equilibrium, total demand equalstotal supply…

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