Question

Calculate the equilibrium level of income if C=R100 million + 0,8y and I =R125 million

Answer 1

The equilibrium income level is determined by the formula

Y = C + I

Y = 100 + 0.8Y + 125

(1-0.8) Y = (100 + 125)

0.2Y = 225

Y = 225 / 0.2

Y = 1125