in an economy c= 500+0.9y and I= 1000 calculate equilibrium level of income and consumption expenditure
Answers
Answered by
2
Consumption Function is C = 500+ 0.9 Y where Y in the income in the economy.
At equilibrium level of income,
AS=AD
Y= C+I
=> Y= 500 + 0.9 Y + 3,000
=> Y - 0.9 Y = 500 + 3,000
=> 0.1 Y = 3,500
=> Y = 3,500/ 0.1 = 35,000.
Similar questions