The saving function of a two sector economy is given as $S=(-)100+0.2Y$. The equilibrium level of income of this economy is 1000, then calculate the value of consumption at equilibrium?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → 900
$S=(-)100+0.2Y$
Y=1000
S= −100+0.2 * (1000) = 100
Y = C + S
1000 = C + 100
C = 900