Question

Find equilibrium Y when: $\text{C}=100+0.5\text{Y}$ and $\text{I}=1,000$

Answer 1

Equilibrium is achieved when:

$\text{AS = AD}$

Or, when $\text{Y=C+I}$

Substituting the values of C and I, we get:

$\text{Y =100 + 0.5 Y + 1,000}$

Or, $\text{Y - 0.5 Y}=100+1,000$

Or, $0.5\text{Y}=1,100$

$\therefore \text{Y}=\frac{1,100}{0.5}=2,200$