Equlibrium level of National Income (1 Viewer)

[waxtrel]

quick question: how do you calculate the equilibrium level of national income? given a table that includes:

National Income | Consumption | Savings | Investment

is it Y = C + I (i.e. where national incomes eqals consumption plus investment)
or Y = C + S

and why would that be the case?

much obliged

 

[JB10]

Weird, I just came online to ask a similar question:

What is the equilibrium level of income if C=100 + 0.8Y and I=40
The final answer is 700 but I have no idea how they get it?

 

[chs09]

If you consider Aggregate supply: Y = C + S + T since income must be either consumed, saved or taxed.

 

[chs09]

Weird, I just came online to ask a similar question:

What is the equilibrium level of income if C=100 + 0.8Y and I=40
The final answer is 700 but I have no idea how they get it?

I did that same question to in a multiple choice past HSC. I was unsure but i workd out that if you substitude y = 700 then C + I = 700. If you consider it this way then Y would equal C + I and at an income level of 700 there is an equilibrium. Another way you could do it would be to let Y = C + I: -

Y = 100 + 0.8Y + 40
0.2Y = 140
Y = 140/0.2
= 700

I only just worked this out so for my previous response i suppose that Y = C + I for national income since Y = C + S + T is more in consideration to household income.

 

[JB10]

I did that same question to in a multiple choice past HSC. I was unsure but i workd out that if you substitude y = 700 then C + I = 700. If you consider it this way then Y would equal C + I and at an income level of 700 there is an equilibrium. Another way you could do it would be to let Y = C + I: -

Y = 100 + 0.8Y + 40
0.2Y = 140
Y = 140/0.2
= 700

I only just worked this out so for my previous response i suppose that Y = C + I for national income since Y = C + S + T is more in consideration to household income.

Awesome! Thanks alot.. It had me stumped for about 5 minutes

 

[mrhorseham]

i was confused on that question too, hahaha, from memory i think it asked to cal. simple multiplier aswell, and there was only one ans with the multiplier as 5, so that had to be it