In an economy C= 200+ 0.5 Y is the consumption function where C is the – InterviewSolution

1.	In an economy C= 200+ 0.5 Y is the consumption function where C is the consumption expenditure and Y is the national income. Investment expenditure is ₹ 400 crores. Is the economy in equilibrium at an income level ₹ 1500 crores? Justify your answer.
Answer» G the EXPENDITURE approach to GDP, Y=C+I+G Y=200 + 0.75(Y-200)+200+300 Y=700+0.75Y-150 0.25Y=550 Y=2200 2. Aggregate Consumption Level C=200+0.75(Y-T) C=200+0.75(2200-200) C=200+1500=1700 3. Y=C+S Y-C=S S=2200-1700=500 4.MPC is the COEFFICIENT

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