Question

classmate
Date
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Q. In an economy C= 200+ 0.5Y is the
conscemption function where is the
conscemption expenditione & Y is the national
income. Investment expenditance is 400crores.
Determine the value of equilibrium level of
national income in the economy.​

Answer 1

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Answer 2

SOLUTION

GIVEN

In an economy C = 200+ 0.5Y is the consumption function where is the consumption expenditure & Y is the national income. Investment expenditure is 400crores.

TO DETERMINE

The value of equilibrium level of national income in the economy.

EVALUATION

Here it is given that

C = 200 + 0.5Y

Where C is the consumption expenditure & Y is the national income

Here it is also stated that

I = Investment expenditure = 400crores

Now at the equilibrium level

Y = C + I

$\implies \sf{Y = (200 + 0.5Y) + 400}$

$\implies \sf{Y - 0.5Y = 200 + 400}$

$\implies \sf{0.5Y = 600}$

$\displaystyle \implies \sf{Y = \frac{600}{0.5}}$

$\displaystyle \implies \sf{Y = 1200}$

FINAL ANSWER

Hence the value of equilibrium level of national income in the economy

= 1200 crores

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