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Economics · 2023 · 4 marks
Determination of Income and EmploymentDetermination of Equilibrium Income in the Short Run4 marksApplyshort answer
CBSE 2023 · Region 4 · Set 1 · Q13
Suppose consumption function for an economy is C = 80 + 0.75 Y (where C = consumption function and Y = national income) and the investment…
Suppose consumption function for an economy is C = $\displaystyle 80$ + $\displaystyle 0.75$ Y (where C = consumption function and Y = national income) and the investment expenditure is ₹ $\displaystyle 200$ crore.
Estimate the following :
(a)
Equilibrium level of income
(b)
Values of consumption and saving at equilibrium level of income
Marking-scheme solution
Given, C = $\displaystyle 80$ + 0.75YI = ₹ $\displaystyle 200$ croreAs we know, at the equilibrium level, Y = C + IY = ($\displaystyle 80$ + 0.75Y) + $\displaystyle 200$$\displaystyle Y = \frac{280}{0.25}$ = ₹ $\displaystyle 1,120$ croreAt equilibrium level of Income; Y = ₹ $\displaystyle 1,120$ croreC = $\displaystyle 80$ + $\displaystyle 0.75$ ($\displaystyle 1120$)C = ₹ $\displaystyle 920$ croreY = C + SS = $\displaystyle 1120$ – $\displaystyle 920$ = ₹ $\displaystyle 200$ crore
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CBSE Class 12 Economics past-paper question from the 2023 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.