Question

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 1

The Correct Option is B

The correct option is(B): Y=5000-125i