In an economy, C = 500 + 0.9 Y and I = 1000 (where, C = Consumption expenditure and Y= National Income and l= Investment). Calculate the following:

(i) Equilibrium level of income.

(ii) Consumption expenditure at equilibrium level of income.

Here, C= 500 + 0.9 Y,I = 1000, Y=C+I .

Y= 500+ 0.9 Y+1000

=> Y — 0.9 Y= 1500

=> 0.1 Y= 1500 = Y = 1500/ 0.1 = 15000

Again, we know that, Y = C + I

=> 15000 = C+1000

.-. C = 15000 - 1000 = 14000