In an economy, C = 200 + 0.75 Y is the consumption function where C is consumption expenditure and Y is National Income. Investment expenditure is 4000. Calculate equilibrium level of income and consumption expenditure.
C = 200 + 0.75Y
Y = C+I ,
Y = 200 + 0.75Y + 4000
Y - 0.75Y = 4200, 0.25Y = 4200
Y = 4200 / 0.25 = 16800
C = Y - I = 16800 - 4000 = 12800