Question

in an economy c =500 +0:5y and i =800 where c= consumption y=income i =investment 1 equilibrium level of the income 2 consumption expenditure at equilibrium level of income in and economy economy c = 500+0:75i=800 calculate the following 1 equilibrium level of the income 2 consumption expenditure at equilibrium level of the income​

Answer 1

Answer:

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Answer 2

Explanation:

At equilibrium level of output,

AS=AD

Y= C+I

=> Y= 300+ 0.8 Y + 500

=> Y - 0.8 Y = 300+ 500

=> 0.2 Y = 800

=> Y = 800/ 0.2 = 4,000

At equilibrium level of Income, consumption expenditure is

300 + 0.8 ( 4,000)

= 300 + 3,200

= 3,500

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