Determination of Equilibrium Income

IMPORTANT

Determination of Equilibrium Income: Overview

This topic covers concepts, such as, Algebraic Method of Determination of Equilibrium Income, Determination of Equilibrium Income in Short Run, Graphical Method of Determination of Equilibrium Income and Effect of an Autonomous Change in Aggregate Demand etc.

Important Questions on Determination of Equilibrium Income

MEDIUM
IMPORTANT

According to the Keynesian theory of employment, the state of underemployment is obtained only when the economy is in equilibrium. 

HARD
IMPORTANT

In an economy, C = 300 + 0.8Y and I = 500 (where C = Consumption, Y = Income, I = Investment). Calculate the following: (a) Equilibrium level of income; (b) Consumption expenditure at equilibrium level of income.

HARD
IMPORTANT

If in an economy, C = 500 + 0.9Y and I = Rs. 1,000 crores, where C = Consumption Expenditure, Y = National Income, I = Investment. Calculate the Equilibrium Level of Income.

HARD
IMPORTANT

If in an economy: (a) Consumption function is given by C = 100 + 0.75Y, and (b) Autonomous Investment is Rs. 150 crores. Estimate Equilibrium level of Income.

HARD
IMPORTANT

If in an economy: (a) Consumption function is given by C = 100 + 0.75Y, and (b) Autonomous Investment is Rs. 150 crores. Estimate Consumption and Savings at the Equilibrium Level of Income.

HARD
IMPORTANT

Given the following information, identify whether the economy is in equilibrium or not:

  Particulars Amount
(i) Autonomous Consumption and Investment Expenditure (A) Rs. 200 crores
(ii) Marginal Propensity to Consume (MPC) 0.70
(iii)  National Income Rs. 1,000 crores

 

HARD
IMPORTANT

In an economy, C = 200 + 0.5Y is the consumption function where C is the consumption expenditure and Y is the national income. Investment expenditure is Rs. 400 crores. Is the economy in equilibrium at an income level Rs. 1,500 crores? Justify your answer.

HARD
IMPORTANT

In an economy the autonomous investment is Rs. 100 and the consumption is C = 80 + 0.4Y. Is the economy in equilibrium at an income level Rs. 400? Justify your answer.

HARD
IMPORTANT

Calculate the equilibrium level of income in the economy, if C = 500 + 0.9Y; and Investment Expenditure = Rs. 3,000.

HARD
IMPORTANT

From the following data calculate the equilibrium level of national income:

(i) Autonomous Consumption Rs. 500
(ii) Marginal Propensity to Save 0.2
(iii) Investment Rs. 2000

 

HARD
IMPORTANT

An economy is in equilibrium. Calculate national income from the following:

(i) Autonomous consumption Rs. 100
(ii) Marginal propensity to save 0.2
(iii) Investment Expenditure Rs. 200

 

HARD
IMPORTANT

From the following data about an economy, calculate its equilibrium level of income:

(i) Marginal Propensity to Consume 0.5
(ii) Autonomous Consumption Expenditure Rs. 300
(iii) Investment Expenditure Rs. 6,000

 

HARD
IMPORTANT

Calculate equilibrium national income from the following:

(i) Consumption expenditure at zero income Rs. 60
(ii) Marginal propensity to consume 0.9
(iii) Investment Rs. 100

 

HARD
IMPORTANT

Answer the following questions based on the data given below:

Planned level of investment = Rs 200 crores C = 100 + 0.8Y 

(a) Determine the Equilibrium Level of Income.

(b) Calculate the saving and consumption expenditure at equilibrium level of income.

HARD
IMPORTANT

The consumption function is given as C = 75 + 0.75Y and autonomous investment is Rs 100 crore. Derive the saving function and calculate the level of income at which saving is equal to investment.

HARD
IMPORTANT

In an economy, C = 300 + 0.8Y and I = 500 (where C = Consumption, Y = Income, I = Investment). Calculate the following: (a) Equilibrium level of income; (b) Consumption expenditure at equilibrium level of income.

HARD
IMPORTANT

In an economy S = -50 + 0.5Y is the saving function (where S = saving and Y = national income) and investment expenditure is Rs 7,000. Calculate: (i) Equilibrium level of national income. (ii) Consumption expenditure at equilibrium level of national income.

HARD
IMPORTANT

In an economy, the consumption function is C = 600 + 0.9Y, where C is consumption expenditure and Y is income. Calculate the equilibrium level of income and consumption expenditure, when investment expenditure is 500.

HARD
IMPORTANT

The consumption function of an economy is given as: C = 200 + 0.75Y, If planned investments are Rs 500 crores, calculate equilibrium level of national income.

HARD
IMPORTANT

The consumption function is expressed as: C = 100 + 0.25Y (where C = consumption expenditure and Y = National Income). Calculate saving if consumption expenditure at equilibrium level of national income is Rs 500 crores.