Given the following set of data, calculate equilibrium income.

C = 100 + 0.8Y

Investment = ₹ 260 Cr.

₹ 1,800 Cr

The correct answer is:  ₹1,800 Cr

Consumption function: In macroeconomics, we often use the consumption function to relate consumption (C) to income (Y).

• A common form of the function is: C =  $\overline{C}+c.Y$ (Where $\overline{C}$ is Autonomous expenditure and c is the marginal propensity to consume.)

Given C = 100 + 0.8Y

Investment = 260 Cr

We know that Y= C + I 

                      Y= 100 + 0.8Y +260

                     0.2 Y = 360

                           Y = 360/0.2= Rs 1800 Cr

So, the equilibrium income is ₹1800 Cr.