CameraIcon

SearchIcon

MyQuestionIcon

1

You visited us 1 times! Enjoying our articles? Unlock Full Access!

Adjustment in Partner's Capital A/c

In an economy...

Question

In an economy, C = 300 + 0.8 Y and I = 500 (where C = Consumption, Y = Income, I = Investment) Calculate the following: (a) Equilibrium level of income; (b) Consumption expenditure at equilibrium level of income.

Open in App

Solution

At equilibrium level of output,
AS=AD
Y= C+I
=> Y= 300+ 0.8 Y + 500
=> Y - 0.8 Y = 300+ 500
=> 0.2 Y = 800
=> Y = 800/ 0.2 = 4,000
At equilibrium level of Income, consumption expenditure is
300 + 0.8 ( 4,000)
300 + 3,200
3,500

Suggest Corrections

thumbs-up

1

Similar questions

Q. C = 50 + 0.5 Y is the consumption function where C is consumption expenditure and Y is National Income and investment expenditure is 2,000 in an economy. Calculate: (i) Equilibrium level of (national) income; (ii) Consumption expenditure at equilibrium level of (National) income.

Q. C = 100 + 0.4 Y is the Consumption Function of an economy, where C is Consumption Expenditure and Y is National Income. Investment expenditure is Rs.100. Calculate: (i) Equilibrium level of National Income; (ii) Consumption expenditure at equilibrium level of national income.

Q. In an economy, the consumption function is C = 600 + 0.9 Y, where C is consumption expenditure and is income. Calculate the equilibrium level of income and consumption expenditure, when investment expenditure is 500.
(Equilibrium level of income 11,000; Consumption expenditure = 10,500.)

Q. From the following information about an economy, calculate (i) its equilibrium level of national income, and (ii) saving at equilibrium level of national income. Consumption function: C = 200 + 0.9 Y (where C = consumption expenditure and Y = national income) Investment expenditure: I = 3,000.

Given, the consumption function, C = 150 + 0.6Y, where C = consumption expenditure, Y = income and investment expenditure = Rs 2,000. Calculate:

(i) Equilibrium level of national income

(ii) Consumption at equilibrium level of national income

(iii) Saving at equilibrium level of national income

View More

Join BYJU'S Learning Program

similar_icon

Related Videos

lock

Let’s Settle

ACCOUNTANCY

Watch in App

explore_more_icon

Explore more

Adjustment in Partner's Capital A/c

Standard XII Accountancy

Join BYJU'S Learning Program

CrossIcon