Answer the following questions based on the data given below:(i) Planned investment = * 200 crores(ii) C = 50 + 0-8YDetermine the equilibrium level of income.Calculate the saving and consumption expenditure at equilibriumlevel of income.
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(i) At equilibrium,
AS=AD
Y= C+I
=> Y= 200 + 0.5 Y + I
=> Y - 0.5 Y = 200 + 1,500
=> 0.5 Y = 1,700
=> Y = 1,700/ 0.5 = 3,400
(ii) Consumption Function, C = 200+ 0.5 Y where Y in the income in the economy.
So at national income 3,400 , consumption expenditure is
C = 200+ 0.5 ( 3,400)
= 200 + 1,700
= 1,900
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