Calculate the Equilibrium level of Income for an imaginary economy, if it is given that :

(a)

Saving function, S = (–)$\displaystyle 500$ + $\displaystyle 0$·$\displaystyle 2$ Y

(a)

where S = Savings, Y = Income

(b)

Autonomous Investments (I₀) = ₹ $\displaystyle 1,500$ crore

At the equilibrium level of income, Savings = Investment, i.e. S = I(–) $\displaystyle 500$ + $\displaystyle 0$·$\displaystyle 2$ Y = $\displaystyle 1,500$$\displaystyle 0$·$\displaystyle 2$ Y = $\displaystyle 1,500$ + $\displaystyle 500$ = $\displaystyle 2,000$Y = $\displaystyle 2,000$ ÷ $\displaystyle 0$·$\displaystyle 2$Y = ₹ $\displaystyle 10,000$ croreHence, the equilibrium level of income is ₹ $\displaystyle 10,000$ crore.