Ch-8 Income determination and Multiplier Q-85
Solution
AS we know equilibrium is attain at point where AD = AS.
AD = C + I
AS we know equilibrium is attain at point where AD = AS.
AD = C + I
Where C = a + by
a is autonomous consumption and b is MPC , y is incom
AD = 200 + 0.70(1000)
AD = 200 + 700
AD = 900 crores
AD = 200 + 0.70(1000)
AD = 200 + 700
AD = 900 crores
But AS = Y(1000 crores)
Hence, it is not equilibrium
Hence, it is not equilibrium