Question

Given that S = -25+0.5Y and I = 5000, find equilibrium Y and equilibrium C.

(ii) Find C at equilibrium Y, when Y=6000 and C=100 + 0.75Y​

Answer 1

$\sf\red{In \: equilibrium,S=I}$

$\sf\red{So \: that,-25+0.5=5000}$

$\sf\red{or,0.5Y=5000+25}$

$\sf\red{0.5Y=5025}$

$\sf\red{Y=\frac{5025}{0.5}=10050}$

$\sf\red{S \: at \: equilibrium : S = -25+0.5(10050)}$

$\sf\red{-25+5025=5000}$

$\sf\red{We \: know Y=C+S}$

$\sf\red{Or,C=Y-S}$

$\sf\red{Thus, equilibrium \: C=10050-5000}$

$\implies$$\sf\red{5050}$