Given that Y = C + I, where C = 50 + 0.75Y and I = N45m, what is the equilibrium level of income?
- N20m
-
N380m
- N200m
- N180m
The correct answer is: B
Explanation
C = Consumption Function, Y is the income in the economy and I = Investment Expenditure
Given Y = C + I, where C = 50 + 0.75Y and I = N45m
Y = 50 + 0.75Y + 45
Y - 0.75Y = 95
Y(1 - 0.75) = 95
Y = \(\frac{95}{0.25}\) = 380
Therefore, the equilibrium level of income = 380m