(Advanced analysis)Answer the question on the basis of the following information for a private closed economy. $\begin{array} { l } S = - 20 + 0.4 Y \ I _ { g } = 25 - 3 i \end{array}$ where S is saving,I_g is gross investment,i is the real interest rate,and Y is GDP. Refer to the information.In equilibrium,the level of consumption will be: A) $80. B) $95. C) $65. D) $70.

Question

Quizplus · Accepted Answer

In a private closed economy, GDP (Y) = Consumption (C) + Saving (S). Gross investment (I_g) is equal to investment (I) + Saving (S). Therefore, Y = C + S = I + S + C. Simplifying this equation, Y = C + I. In equilibrium, Y = C + I, so C = Y - I. Given the information provided, Y = $100 and I = $35. Therefore, C = $65.

(Advanced Analysis)Answer the Question on the Basis of the Following S=−20+0.4YIg=25−3i\begin{array} { l } S = - 20 + 0.4 Y \\I _ { g } = 25 - 3 i\end{array}S=−20+0.4YIg​=25−3i​

(Advanced Analysis)Answer the Question on the Basis of the Following $\begin{array} { l } S = - 20 + 0.4 Y \\I _ { g } = 25 - 3 i\end{array}$