Re: JNU ECOM 2011 QUES 11-22 {Must see}

Posted by E A Ibrahim on Mar 08, 2014; 12:24pm
URL: http://discussion-forum.276.s1.nabble.com/JNU-ECOM-2011-QUES-11-22-Must-see-tp7585124p7585134.html

I too didn't read the para.

I think the answer for question 11 is option D None of the above

Since equilibrium income is 1750, which is above 1500, consumption function is valid only upto 1500 units. The remaining 250 is saved (invested), since S=I.

Of the 1500, 200+0.6*1500=1100 units are consumed. Remaining 400 units are also invested (saved).

Aggregate consumption= 1100
Aggregate investment = 650

So, the value of investment required is 650, which is corresponds to option D.

I am not entirely sure of my answer. Please come up if you have a better answer.