S = -200 + 0.25Y
- At equilibrium planned savings are equal to planned investment. Equilibrium level of income is 2,000. Substituting the value of Y in the savings function, we get;
S = -200 + 0.25 × 2,000
S = 300; I = 3300
Thus, investment expenditure at equilibrium level of income is 300.
- Consumption + Savings = Income,
Autonomous consumption means the level of consumption expenditure when income is zero.
When Y = 0, Savings = -200
So, autonomous consumption = 200