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the saving function of an economy i...

the saving function of an economy is S=-200 +0.25 Y the economy is in equilibrium when income is equal to 2,000 ,Calculate :
(a) Investment expendditure at equilibrium level of income .
Autonomous consumption .

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(a) for equilibrium level of income planned saving (S) = planned investment (I)
Substituting the values oF Y and saving function
`S=-200+0.25xx2,000`
`=-200+(1)/(4)xx2,000=300`
Investment expenditure `(I) =S=300`
(At equilibrium I=S)
(b) income = consumption + saving Autonomous consumption means the level of consumption expenditure when income is zero . in the given equation when y ( income ) iszero ,S=-200 because dissaving of -200 needs to take place to finance autonomous consumption .
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