S = -100 + 0.2 Y Is the saving equilibrium level of income. Investment expenditure is 5,000. Calculate the equilibrium level of income.
(Equilibrium Level of Income = 25,500)

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Solution

At equilibrium level of income, Savings = investment
=>−100 +0.2Y=5,000
=>0.2Y = 5,000 + 100
=>0.2Y= 5,100
=> Y= 5,100 / 0.2 = 25,500

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