S = - 100 + 0.2 Y is the saving function in an economy. Investment expenditure is 5,000. Calculate the equilibrium level of income.
S = - 100 + 0.2 Y is the saving function in an economy. Investment expenditure is 5,000. Calculate the equilibrium level of income.
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S = -100 + 0.2y
At equilibrium s = I
I = - 5,000
∴ 5,000 = - 100 + 0.2y
0.2y = 5,100
y = 25,500
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