Question

You are given the following information about a closed economy with no government: Consumption = 115 + 0.6Y Investment = 550 Use the above information to answer the questions that follow:
Q.4.3 Calculate the equilibrium level of income

Answer 1

At Equilibrium level of Income ;AS=AD.

Y is the income of the economy. Y=C+I

$Y=115+0.6Y+550$

$Y-0.6Y=115+550$

$0.4Y=665$

Y =1,662.5