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Given C=100+0.75Y is a consumption function …

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Given C=100+0.75Y is a consumption function and investment expenditure is 800. On the basis of this information calculate (a)equilibrium level of income (b) saving at equilibrium level of income

Posted by Sanath Kaushal 7 years, 10 months ago

CBSE > Class 12 > Economics

1 answers

Vishesh Mittal 7 years, 10 months ago

As we have C = 100+0.75Y... And I=800 We know that, Y=C+I Therefore by using values provided we get Y=100+0.75Y+800 Y-0.75Y=100+800 0.25Y=900 Y=900/0.25 Y=3600 Therefore equilibirium level of income is 3600 (b). We know that at the equilibirium level of income saving curve is equal to the investment curve. Therefore by this approach we get that S=I=800 Hence, saving at the equilibirium level is 800

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