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Income Determination & the Multiplier · Question 17 of 58

Question 17

HardOriginal question

The saving function is S = −50 + 0.25Y and planned investment is ₹100 crore. Equilibrium income is

Options for question 17

Show the answer and explanation
CorrectNot quiteAnswer D

Correct answer: D

Explanation

  1. Set S = I: −50 + 0.25Y = 100.

  2. 0.25Y = 150, so Y = ₹600 crore.

Worth noting

₹400 crore forgets the −50: it solves 0.25Y = 100.

Concept
Equilibrium from S = I
Typical time
100 s
Your time
—
The rule this testsEquilibrium: saving equals investment
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Ten questions from Income Determination & the Multiplier, at your own pace.

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