Question

C = 20 +0.80 Y and Investment Expenditure is 250 crores, then Equilibrium Income is:​

Answer 1

Answer:

Y = 1350 crores

Explanation:

We know that Savings(S) = investments(I)

Therefore = S = I = 250

MPC + MPS = 1

0.80 + MPS = 1

MPS = 1 - 0.80 = 0.20

S = - $\frac{}{C}$ + MPS. Y

250 = -20 + 0.20 Y

270 = 0.20 Y

Y = $\frac{270}{0.20}$

Y = 1350 crores