In an economy `C=500+0.9 Y` and `I=1,000` (where `C=` consumption, `Y= – InterviewSolution

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1.	In an economy `C=500+0.9 Y` and `I=1,000` (where `C=` consumption, `Y=` income, `I=` investment). Calculate the following : (i) Equilibrium level of income. (ii) Consumption expenditure at equilibrium level of income.
Answer» given `Y=C+I` (i) `Y=500+0.9 Y+1000` `Y=1500+0.9 Y` or `0.1 Y=1,500` `Y=` Rs. `15,000` (ii) `C=Y-I=15,000-1,000=` Rs. `14,000`.

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