Consider the macroeconomic model:
Y= C + I
C= a + b √Y
Here: Y is national income, I is fixed investment that does not depend uponCorY,anda>0andb>0areparameters. Cstandsfortotal consumption by all agents in the economy and, as can be seen from the second equation above, depends upon the level of national income.
Solve for Y . This is called the equilibrium level of income in the
economy.
Please show step by step as to how the answer comes about as this is practice.
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