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

(a)

Consumption function, C = $\displaystyle 500$ + $\displaystyle 0$·$\displaystyle 80$ Y

(a)

where C = Consumption, Y = Income

(b)

Autonomous Investments (I₀) = ₹ $\displaystyle 1,000$ crore

Given, Consumption Function C = $\displaystyle 500$ + $\displaystyle 0$·$\displaystyle 8$ YAutonomous Investment (I) = ₹ $\displaystyle 1,000$ croreWe know that, at equilibrium levelY = C + IY = $\displaystyle 500$ + $\displaystyle 0$·$\displaystyle 8$ Y + $\displaystyle 1,000$$\displaystyle 0$·$\displaystyle 2$ Y = $\displaystyle 1,500$Y = ₹ $\displaystyle 7,500$ croreThus, Equilibrium level of Income = ₹ $\displaystyle 7,500$ crore