What will be the saving and consumption expenditure at equilibrium level of national income when planned investment = Rs 200 crore and C = 100 + 0.6Y? |
savings = 550, consumption = 200 savings = 750, consumption = 200 savings = 200, consumption = 550 savings = 200, consumption = 750 |
savings = 200, consumption = 550 |
The equilibrium level of income can be determined with the help of: Y = C + I ( at equilibrium level) Y = (c̅ + bY) + I Y = 100 + 0.6Y + 200 Y - 0.6Y = 300 0.4Y = 300 Y = 750 C = c̅ + bY C = 100 + 0.6 (750) C = 550 As, the income is consumer or saved we can say that, Y = C + S 750 = 550 + S S = 200 Hence, consumption is 550 and savings is equal to 200 |