Question

If c = 300 + 0.75y and i = 200, then the equilibrium level of income is

Answer 1

ki a few months back on track and answer to

Answer 2

Equilibrium level of income is Rs. 2000.

Step-by-step explanation:

Since we have given that

$C=300+0.75Y$

Here,

$\bar{C}=300$ (autonomous consumption)

b = 0.75

So, Saving function would be

$-\bar{C}+(1-b)Y\\\\=-300+(1-0.75)Y\\\\=-300+0.25Y$

and we have given Investment = 200

As we know that at equilibrium level,

Savings = Investment

So, it becomes,

$-300+0.25Y=200\\\\0.25Y=200+300\\\\0.25Y=500\\\\Y=\dfrac{500}{0.25}\\\\Y=2000$

Hence, Equilibrium level of income is Rs. 2000.

# learn more:

Suppose the level of autonomous investment in an economy is rs. 200 crors and consumption function of the economy is; c = 80 + 0.75y 1. What will be the equilibrium level of income? 2. What will be the increase in national income if investment increases by rs. 25 crores?

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