Economics Question help (1 Viewer)

[puss]

Hey this question is out of the 2003 HSC Economics Paper, question 8.
I can't make anything of it and was wondering if someone could show me a worked solution for it.

What is the equilibrium level of income if C = 100 + 0.8Y and I = 40

A 100
B 140
C 500
D 700




Many thanks!

 

[williamc]

What is the equilibrium level of income if C = 100 + 0.8Y and I = 40

A 100
B 140
C 500
D 700

I worked it out with my economics teacher after class one day, many terms ago. Can't remember how i did it.

I know it works by arranging an equation and then solving.

 

[puss]

Thanks, I've just been looking in my text book and have worked it out (bloody textbook gave me 0.5Y lol so I didn't know you had to do 1 - 0.5 (I think?))

I'm assuming this is relating to the concept MPC + MPS = 1.

If someone can just assure thats the relationship for me I'd be all set

Thanks again for your help