What will be the equilibrium level when planned investment in Rs 200 crore and C = 60 + 0.7Y ?
Answer & explanation
Correct answer: option 2
The correct answer is Option 2: 867
The equilibrium level of income can be determined with the help of:
Y = C + I ( at equilibrium level)
Y = (c̅ + bY) + I
Y = 60 + 0.7Y + 200
Y = 260 + 0.7Y
Y - 0.7Y = 260
0.3Y = 260
Y = \(\frac{260 }{0.3}\)
Y = 867