In an economy C = 100 + 0.6Y is the consumption function where C is consumption expenditure and Y is the national income. Investment expenditure done by the government is Rs 500 crore. Will the economy be in equilibrium at Income of Rs 1700 crore?

The economy is not in equilibrium and income needs to be less by 200 to be in equilibrium

We have been given the consumption function, C = 100 + 0.6Y and investment expenditure = Rs 500 crore

At equilibrium level Y = C + I

Y = (100 + 0.6Y) + 500

Y - 0.6Y = 600

0.4Y = 600

Y = 1,500

Thus, the equilibrium level of income is Rs 1,500 crore. In order for the economy to be in equilibrium income needs to be less by 200 to be in equilibrium.