Question : In a two sector economy, the saving function is given as S=-10+0.4Y and investment function is expressed as I=-4+0.1Y. Calculate equilibrium level of income?
Option 1: 20
Option 2: 30
Option 3: 15
Option 4: 10
Correct Answer: 20
Solution : Equilibrium,
S=I
-10+0.4Y=-4+0.1Y
0.3Y=6
Y= 20
Hence, Option A is correct.
Question : The saving function of an economy is given as S= -40+0.40Y. If the planned investment is Rs. 250 crore, Calculate equilibrium level of income in the economy.
Option 1: 725
Option 2: 755
Option 3: 780
Option 4: 800
Question : The equilibrium level of income in an economy is Rs. 3000 crore. The autonomous consumption expenditure is equal to Rs.250 crore and investment expenditure is Rs. 1000 crore. Calculate saving function.
Option 1: S=250+(1+b)3000
Option 2: S=250-(1-b)3000
Option 3: S=250+(-b)3000
Option 4: S=250+(1-b)3000
Question : In an economy, the investment expenditure is Rs. 80 crore and consumption function is C= 80+0.75Y. Calculate equilibrium level when planned investment expenditure is decreased by Rs. 20 crore.
Option 1: 540
Option 2: 560
Option 3: 800
Option 4: 600
Question : In an economy, the investment expenditure is Rs. 80 crore and consumption function is C= 80+0.75Y. Calculate equilibrium level when planned investment expenditure is increased by Rs. 10 crore.
Option 1: 680
Option 2: 650
Option 3: 700
Option 2: 780
Option 3: 620
Option 4: 720
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