C = 50 + 0.5Y is the consumption function of an economy where C is consumption expenditure and Y is National Income and investment expenditure is 2000 in an economy. Calculate:
(i) Equilibrium level of National Income.
(ii) Consumption expenditure at equilibrium level of National Income.
Y = C + I or C + S Given, C = 50 + 0.5Y, I = 2000
(i) Y =C + I =50 +0.5Y+2000, 0.5Y = 50+2000,
Y = 2050 / 0.5 =_ 4100
National Income = 4100
(ii) C =50+ 0.5Y=50+ 0.5 X 4100= 50+ 2050 = 2100
Consumption expenditure = 2100