Income determination model of an economy


A simple Keynesian income determination model of an economy is described by the following equation

AE = C + I + G + X - M

where

C = + cYd

Yd = Y + TR - T

TR =

T =

I =

G =

M = mY

X = X

(a) Derive, from first principles, the equilibrium level of income.

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Microeconomics: Income determination model of an economy
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