If C = 500 + 0.9Y and I = 400, then the equilibrium level of income is
A) 900.
B) 1,000.
C) 1,800.
D) 9,000.

Name: If C = 500 + 0.9Y and I = 400, then the equilibrium level of income is A) 900. B) 1,000. C) 1,800. D) 9,000.
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Quizplus · Accepted Answer

The equilibrium level of income is found where aggregate demand equals aggregate supply. Here, aggregate demand (AD) is C + I = 500 + 0.9Y + 400. Setting AD equal to Y (income), we solve 500 + 0.9Y + 400 = Y, which simplifies to Y = 9,000.