Question

From the following data about an economy, Calculate (a) Equilibrium level of National Income and (b) Total Consumption Expenditure at Equilibrium level of National Income.

(i) C = 200 + 0.5Y is the Consumption Function where C is Consumption Expenditure and Y is National Income.

(ii) Investment Expenditure is 1,500.

Answer 1

C = 200 + 0.5(3,400)

or C = 200 + 1,700

or C = 1,900