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Determination of Income and Employment — Economics STD 12 Humanities & Commerce — Question

Rajasthan BoardEnglish MediumSTD 12 Humanities & CommerceEconomicsDetermination of Income and Employment2 Marks
Question
Given the C = 100 + 0.75Y is a consumption function (where C = consumption expenditure and Y-national income) and investment expenditure is ₹ 800. On the basis of this information calculate:
  1. Equilibrium level of national income.
  2. Savings at equilibrium level of national income.
✓

Answer

If C = 100 + 0.75Y + Investment Expenditure is ₹ 800,

  1. Cal. NI.

$\text{Y}=\text{C}+\text{I}=100+0.75\text{Y}+800$

$\text{Y}-0.75\text{Y}=100+800$

$\text{Y}-0.75\text{Y}=900$

$\text{Y}=\frac{90000}{25}=₹\ 3600$

  1. Saving at equilibrium level = I

as I is ₹ 800

$\therefore\ \text{Savings}=₹\ 800$

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