At the equilibrium point when $C=100+0.5 Y$ and $I= 200$, saving will be ........
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → 200
Given: Consumption function: C=100+0.5Y , Investment (I): 200
At equilibrium, Y=C+I
Step 1: Find Equilibrium Income (Y)
Substitute the consumption function into the equilibrium condition:
Y = 100+0.5Y + 200
Y - 0.5 Y = 300
Y = 300/0.5 = 600
Step 2: Find Consumption (C)
C= 100 + 0.5 * 600 = 400
Step 3: Find Saving (S)
S = Y - C
= 600 - 400
= 200