Question

Suppose that for a particular economy, investment is equal to 200, government purchases are 150, net taxes (that is lump-sum taxes minus transfers) is 100, and consumption is given by C = 100 + 0.75Y (1) What is the level of equilibrium income?

विकल्प

• Rs.1500

• Rs. 2000

• Rs. 3000

• Rs.1400

Answer 1

Rs.1500

Explanation:

I = 200

G =150

T = 100

C = 100 + 0.75Y

So, C (Autonomous consumption) = 100

And, MPC (3) = 0.75

(1) equilibrium level of income

Y = `1/(1 - "c")(overline"C" - "c""T" + "I" + "G")`

= `1/(1 - 0.75)`

= `1/0.25 xx 375`

= `375/0.25`