<p>Planned Expenditure is equal to the income in equilibrium, i.e.: </p>

<p><span class="math-container">$Y = C + I + G$</span> (assuming a closed economy)</p>

<p>Therefore, </p>

<p><span class="math-container">$$100+0.6(1000-100) + 100 + G = 1000$$</span>, because <span class="math-container">$ Y = 1000$</span></p>

CC BY-SA 4.0
2019-04-17T14:14:58.347Z
2019-04-17T14:14:58.347Z
Vizag
<p>I have a question from my textbook which is:</p>

<p>Using the Keynesian-cross analysis, assume that the consumption function is
given by C = 100 + 0.6(Y – T). If planned investment is 100 and T is 100, then
the level of G needed to make equilibrium Y equal 1,000 is:</p>

<p>and the answer is 260.</p>

<p>I don't understand how they derived this. Could someone please explain?</p>

<production-function><consumption><keynesian-economics>
Keynesian-cross analysis
Slim Shady
# Keynesian-cross analysis

(Asked by: username_0 on 2019-04-17)

I have a question from my textbook which is:

Using the Keynesian-cross analysis, assume that the consumption function is
given by C = 100 + 0.6(Y – T). If planned investment is 100 and T is 100, then
the level of G needed to make equilibrium Y equal 1,000 is:

and the answer is 260.

I don't understand how they derived this. Could someone please explain?

**Tags:** production-function, consumption, keynesian-economics

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## 1 answers

### Answer by username_1 on 2019-04-17. Score: 0 | Accepted answer

Planned Expenditure is equal to the income in equilibrium, i.e.:

$Y = C + I + G$ (assuming a closed economy)

Therefore,

$$100+0.6(1000-100) + 100 + G = 1000$$, because $ Y = 1000$


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