Given that in an economy, consumption function is

C = 80 + 0.80Y and autonomous investment (I) = 120,

Match List-I with List-II

Choose the correct answer from the options given below:

(A)-(IV), (B)-(I), (C)-(III), (D)-(II)

The correct answer is Option (3) → (A)-(IV), (B)-(I), (C)-(III), (D)-(II)

Given:

Consumption function: C = 80 + 0.80Y
Autonomous investment: I = 120

At equilibrium, Y=C+I

Y=80  +0.80 Y + 120

Y− 0.80Y = 200

0.20Y = 200

Y = 1000

A. Equilibrium level of income = 1000 (IV)

At break-even, C = Y, so savings (S) = 0.

Y=80 + .80Y

Y− 0.80Y = 80

Y= 400

B. Break-even point = 400 (I) 

Investment multiplier (k) = 1/ 1- MPC

                                           = 1/ 1- 0.8

                                           =1/0.2 = 5 

At equilibrium, savings (S) = investment (I). = 120