HSC multiple choice eco question. (1 Viewer)

[magik22]

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

Can someone please explain why? I really don't understand it at all. When I saw this I fought C+I+G+(X-M) - GDP equation. But I don't understand why its 700. I tried working backgrounds and when i substituted in 700 into 'Y' ...

C=100+0.8(700)
C=660

Then I thought add I=40 to 660....it equaled 700...iuno some sort of connection there?

I just don't understand.

 

[mathslover]

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

Can someone please explain why? I really don't understand it at all. When I saw this I fought C+I+G+(X-M) - GDP equation. But I don't understand why its 700. I tried working backgrounds and when i substituted in 700 into 'Y' ...

C=100+0.8(700)
C=660

Then I thought add I=40 to 660....it equaled 700...iuno some sort of connection there?

I just don't understand.

Same here this is the MCQ in the 03 paper i dont know how to do..
someone please explain it to us?

 

[seano77]

Guys this question has been asked before with some good responses here:

http://community.boredofstudies.org/showthread.php?t=185119&highlight=savings+function

 

[mathslover]

Guys this question has been asked before with some good responses here:

http://community.boredofstudies.org/showthread.php?t=185119&highlight=savings+function

Thankyou