The Question : Calculate equilibrium level of income for a hypothetical economy, for which it is given that:
A) Autonomous Investments = ₹ 500 crores, and
B) Consumption function C =100 + 0.80Y
Solution for the question :
Solution:Given Consumption function is, C=100+0.8 Y Autonomous investments=500 crores We know, at equilibrium level Y=C+I Y=100+0.8 Y+500 Y-0.8Y= 600 0.2 Y = 600 Y= ₹ 3,000 crores
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