Question

a) Given the following information- (5) C=100+c(Y-50-ty) T=Rs50 crore G=Rs 50 crore t=0.25 X=10 crore mpc=0.8 M=5+0.1Y a) Find the equilibrium level of output? b) Calculate the value of imports at equilibrium level of Income.​

Answer 1

Explanation:

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Answer 2

Given:

Given the following information- (5) C=100+c(Y-50-ty) T=Rs50 crore G=Rs50 crore t=0.25 X=10 crore mpc(c)=0.8 M=5+0.1Y

To Find:

a) Find the equilibrium level of output?

b) Calculate the value of imports at equilibrium level of Income.​

Solution:

$C=100+c(Y-50-tY)\\C=100+0.8(Y-50-0.25Y)\\C=60+0.6Y$

Now, using the formula to calculate the equilibrium level of output

$Y=C+I+G+(X-M)\\Y=60+0.6Y+50+[10-(5+0.1Y)]\\Y=115+0.5Y\\Y=230$

This is the value of the equilibrium level of output

Calculation of value of imports at the equilibrium level of income, which goes as

$M=5+0.1(230)\\=28cr$

Hence, the value of equilibrium of output is 230cr and the value of imports at the equilibrium level of income is 28cr.