Equilibriums level of income Multi-question (1 Viewer)

[Kung_Foo_Cow]

I am stumped :/

What is the equilibrium level of income if C = 100 + 0.8Y and I =40?

A)100
B)140
C)500
D)700

The answer is D 700, but i am still unsure as to how you get that answer...

Any help much appreciated

cheers.

 

[Jago]

http://community.boredofstudies.org/showthread.php?t=83597&highlight=multiple+choice

i use the formula Y = C + I, it gets the correct answer but apparently it's the wrong formula.

 

[Sarah168]

is there more to the Q?

 

[Kung_Foo_Cow]

Theres not any more to the question, its seems a bit short ain't it?
The question itself should be right cuz its out of the 2003 HSC paper :S

 

[Kung_Foo_Cow]

okay well i read that link and it alls seem to make sense now

thanks jago

 

[Mandy101]

You could also do Equilibrium Y occurs when S = I

Because you know C = 100 + .8Y, you know that S = -100 + .2Y

Thus... -100 + .2Y = 40

0.2Y = 140

140 / 0.2 = 700

 

[Z_Nizzle]

given:

C = 100 + 0.8Y and I =40

we know that Y= C+I
therefore Y= 100 + 0.8Y + 40
so Y= 140 + 0.8Y
continuing on 0.2Y= 140
therefore Y= 140/ 0.2
Answer= 700

 

[ar5ena1]

z_nizzle is correct