If $C = 20 + 0.80 Y$ and Investment Expenditure is Rs. 50 crores, then Equilibrium Income is:

Rs. 400 crores

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Rs. 350 crores

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Rs. 200 crores

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Rs. 100 crores

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Solution

The correct option is A Rs. 400 crores
If Consumption Function is C = 20+ 0.80 Y where Y in the income in the economy. Then

At equilibrium level of income,

AS=AD

Y= C+I

=> Y= 20 + 0.80 Y + 50

=> Y - 0.80 Y = 20 + 50

=> 0.20 Y = 70

=> Y = 70/ 0.20 = Rs. 350 crores.

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If C=20+0.80 Y and Investment Expenditure is Rs. 50 crores, then Equilibrium Income is:

The correct option is A Rs. 400 croresIf Consumption Function is C = 20+ 0.80 Y where Y in the income in the economy. Then At equilibrium level of income, AS=AD Y= C+I => Y= 20 + 0.80 Y + 50 => Y - 0.80 Y = 20 + 50 => 0.20 Y = 70 => Y = 70/ 0.20 = Rs. 350 crores.

If $C = 20 + 0.80 Y$ and Investment Expenditure is Rs. 50 crores, then Equilibrium Income is:

The correct option is A Rs. 400 crores
If Consumption Function is C = 20+ 0.80 Y where Y in the income in the economy. Then

At equilibrium level of income,

AS=AD

Y= C+I

=> Y= 20 + 0.80 Y + 50

=> Y - 0.80 Y = 20 + 50

=> 0.20 Y = 70

=> Y = 70/ 0.20 = Rs. 350 crores.