Question
From the following information about an economy, calculate (i) its equilibrium level of national income, and (ii) Savings at equilibrium level of national income. Consumption function C = 200 + 0.9Y (where C = Consumption expenditure and Y = National Income), Investment expenditure is र 3000.
Solution
(i) For equilibrium
Y = C + I
Y = (200 + 0.9Y) + 3000
Y - 0.9Y = 3200 or 0.1Y = 3200
(ii)
Y = C + I
Y = (200 + 0.9Y) + 3000
Y - 0.9Y = 3200 or 0.1Y = 3200
(ii)
