Question
Given the saving function S = -20 + 0.2 Y and autonomous investment (I) = Rs. 100 million. the equilibrium level of consumption would be:
The correct answer is
500
Income: \(S=I\implies-20+0.2Y=100\implies Y=600\).
Consumption: \(C=Y-S=600-100=500\). Thus equilibrium consumption is Rs.500million.
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