If C = 300 + 0.75Y and I = 200, then the equilibrium level of income is
A) 750.
B) 1,000.
C) 1,800.
D) 2,000.

Name: If C = 300 + 0.75Y and I = 200, then the equilibrium level of income is A) 750. B) 1,000. C) 1,800. D) 2,000.
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Question

Quizplus · Accepted Answer

The equilibrium level of income is found where aggregate demand (AD) equals aggregate supply (Y). Here, AD = C + I = 300 + 0.75Y + 200. Setting AD = Y gives Y = 500 + 0.75Y. Solving for Y, we get Y = 2,000.