The following information is consumption and investment data for a private closed economy.Figures are in billions of dollars.C = 60 + .6Y I = I₀ = 30
Refer to the above data.The equilibrium level of income (Y ) is:

Question

Quizplus · Accepted Answer

To find the equilibrium level of income, we need to set Y equal to both C and I, and solve for Y. 
C = 60 + 0.6Y 
I = 30 
Setting C equal to I: 
60 + 0.6Y = 30 
0.6Y = -30 
Y = -50 
This is a non-sensical answer because income cannot be negative. 
Setting C equal to Y (since at equilibrium, consumption equals income): 
60 + 0.6Y = Y 
0.4Y = 60 
Y = 150 
Plug in Y = 150 into the investment function to make sure it is also true: 
I = 30 
Since both C and I are equal to Y at Y = 150, this is the equilibrium level of income. 
Therefore, the best choice is B, 225.

The Following Information Is Consumption and Investment Data for a Private