What will be the equilibrium income when commodity market (IS) and the money market (LM) are in
equilibrium in the case of C=102+0.7Y, I=150-100i, MS=470, MT=0.25Y, MZ= 124-200i ?
(A) 1100
(B) 1300
(C) 1900
(D) 1000
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Commodity Market Equilibrium for a simple two sector economy exists when Y= C+I
I.e. Y = 102+0.7Y+150-100i
Y=252+0.7Y-100i
0.3Y+100i -252 = 0 -------------------- (Equation 1)
Money market equilibrium exists when MS= MT+MZ
I.e. 470=0.25+124-200i
0.25Y-200i-346=0 --------------------- (Equation 2)
Solving 1 and 2
Y= 1000