Question

Solve this Too.........​

Answer 1

Answer:

When the economy is at equilibrium,  

AS=AD

Y= C+I  

=> Y= 300 + 0.8 Y + I  

=> Y - 0.8 Y =300 + 700

=> 0.2 Y = 1000

=> Y = 1000/ 0.2 = 5,000 crores.  

Hence, the income at equilibrium level is Rs. 5,000 crores.  

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Explanation:

Answer 2

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

When the economy is at equilibrium,

AS=AD

Y= C+I

=> Y= 300 + 0.8 Y + I

=> Y - 0.8 Y =300 + 700

=> 0.2 Y = 1000

=> Y = 1000/ 0.2 = 5,000 crores.

Hence, the income at equilibrium level is Rs. 5,000 crores.

=> 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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