Question

Assume there are no transfer payments (TR = 0). Autonomous consumption (a) is 500, the Marginal Propensity to Consume (MPC) is 0.8,lump-sum taxes are 10 (T 10), Government Spending (G) is 50, Planned Investment is 100, and Net Exports (NX) are -20. What is equilibrium GDP? Round to two decimals.

Fig: 1