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Determination Of Income And Employment

Question
CBSEENEC12013062
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Given consumption function C = 100 + 0.75Y (where C = Consumption expenditure and Y = National Income) and Investment expenditure र 1000. Calculate:
(i) Equilibrium level of national income.
(ii) Consumption expenditure at equilibrium level of national income. 

Solution

(i) For equilibrium
         straight Y space equals space straight C space plus space straight I space space space equals space 100 space plus space 0.75 straight Y space plus space 1000 space space space space space space space space space space space space space left parenthesis Given space straight C space equals space 100 space plus space 0.75 straight Y right parenthesis
         straight Y minus 0.75 straight Y space equals space 1100 space space space or space space space 0.25 straight Y space equals space 1100 space space space space space space space space space space space space straight Y space space equals space 1100 space cross times space 100 over 25 space equals space 4400 space space space space space space space left parenthesis Equilibrium space level space of space income right parenthesis
(ii)              straight C space equals space 100 space plus space 0.75 straight Y space space
                       equals space 100 space plus space 0.75 space cross times space 4400
                       space equals space 100 space plus space 3 over 4 cross times 4400 space equals space 3400    (Consumption expenditure)

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Some More Questions From Determination of Income and Employment Chapter

Explain the meaning of aggregate supply (AS).

Calculate consumption level for Y = र 1000 crores if consumption function is C = 300 + 0.5Y.

State relationship between income and consumption.

What is Breakeven point?

What are the types of Propensity to consume?

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