Calculate equilibrium level of income for a hypothetical economy, for which it is given that:


Autonomous Investments = ₹ 500 crores, and

Consumption function, C = 100 + 0.80Y

(2 Marks)
Answer
Given Consumption function is,
C=100+0.8 Y
Autonomous Investments=500 crores
We know, at equilibrium level
Y=C+I Y
Y=100+0.8 Y+500
Y0.8Y=600
0.2 Y =600
Y= ₹ 3,000 crores
Equilibrium level of Income = Rs 3000 crores