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Question
Which equation is the equilibrium condition when consumption contains Autonomous Consumption and induced consumption?
Options
\[Y=\overline{C}+\overline{I}+cY\]
\[Y_d=Y-T\]
\[Y=\overline{C}+\overline{I}-cY\]
\[Y=\overline{C}+\overline{I}+G+c(Y-T)\]
MCQ
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Solution
The equilibrium condition is \[Y=\overline{C}+\overline{I}+cY\]. It equates planned (Ex-ante) Output with planned aggregate demand in the two-sector model.
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