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jnu 2011

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jnu 2011

manisha sachdeva
54 posts
consider an economy where in equilibrium level of aggregate income is the sum of aggregate invetment and consumption expenditure.
for values of y less than or equal to 1500,c=200+0.6y and any amount of aggregate income in excess og 1500 is entirely saved in economy.
if full employment level of y=1750,the minimum value of investment necessary to ensure full employment in economy will be?
for reference its 11 th ques from 2011 jnu sss.
plz explain the steps
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Re: jnu 2011

Homer Simpson
551 posts
This post was updated on May 03, 2014; 6:19pm.
Answer is 650

at Y=1500, I = 400 (using the Y=C+I equation)

for Y>1500,
        => Delta Y = Delta I (as consumption becomes some fixed value now)

I need investment to rise by 250 to get to Y=1750. Thus, investment level = 400+250 = 650
“Operator! Give me the number for 911!”