Test Index

JAMB Economics 2023 Paper

Question : 63

Total: 79

Solution:

Concept:

At equilibrium, national income is the sum of consumption, investment, and government spending.

Explanation:

Given

Y = C + I + G

, with

C = 100 + 0.75Y

I = 50

, and

G = 200

Substitute the values into the equilibrium equation.

Y = 100 + 0.75Y + 50 + 200

Y = 0.75Y + 350

Collect like terms:

Y - 0.75Y = 350

Factor out

Y

Y(1 - 0.75) = 350

0.25Y = 350

Divide both sides by

0.25

Y = \frac{350}{0.25}

Y = 1400

Answer:

The equilibrium level of national income is

1400

Therefore, the correct option is D.

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