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+1 vote
1.8k views
in Economics by (63.7k points)

In an Economy, C = 200 + 0.75 Y is the consumption function where C is consumption Expenditure and Y is National Income. Investment expenditure is 4000. Calculate equilibrium level of Income and Consumption Expenditure.

1 Answer

+2 votes
by (69.4k points)
selected by
 
Best answer

At Equilibrium y = C + I 

Y = 200 + 0.75 Y + 4000 

→ 0.25 Y = 4200 

→ Y = 16800 

and C = 200+(0.75) x 16800 

= 12800 

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