The following information is consumption and investment data for a private closed economy.Figures are in billions of dollars.
C = 60 + .6Y
I = I 0 = 30
-Refer to the above data.The equilibrium level of income (Y )is:
A) 360
B) 225
C) 200
D) 135

Question

Quizplus · Accepted Answer

To find the equilibrium level of income, we need to set C (consumption) equal to Y (income) and solve for Y.

C = Y 
60 + 0.6Y = Y 
0.4Y = 60 
Y = 150

Next, we need to check if this level of income is consistent with investment (I) of 30.

Y = C + I 
150 = (60 + 0.6(150)) + 30 
150 = 150

Since the equation holds true, the equilibrium level of income is Y = 150 billion dollars, or choice B.

The Following Information Is Consumption and Investment Data for a Private