Question

A = C + T = ₹ 50 crores, MPC = 0.8, Y = ₹ 4000 crores

(a) State whether the economy has reached in equilibrium or not (Hint: Y = \(\bar{A}\) + CY)

(b) Illustrate your conclusion in a diagram.

Answer 1

Y = \(\bar{A}\) + c.y

Since \(\bar{A}=\bar{C}\bar{I}\) . we have

Y = \(\bar{A}=\bar{C}\bar{I}\) x c.y Putting values, we get

Y = 50 + 0.8 x 4000

= 50 + 3200 – 3250

Since 3250 ≠ 4000, equilibrium is not reached in the economy.