JAMB 2018 Economics · Question 67

Given that Y = C + I, where C = 50 + 0.75Y and I = N45m, what is the equilibrium level of income?

Options

A.N20m
B.N380m
C.N200m
D.N180m

Answer: B. N380m

Explanation written with AI and checked against the answer key

Analyze the question: We need the equilibrium income, where Y = C + I, given C = 50 + 0.75Y and I = N45m. Concept: At equilibrium, national income equals total expenditure (consumption plus investment). Substitute the consumption function into the equilibrium condition and solve for Y. Solution: Y = C + I Y = 50 + 0.75Y + 45 Y − 0.75Y = 95 0.25Y = 95 Y = 95 / 0.25 = 380 So Y = 380 (in millions, if autonomous consumption of 50 is also in millions), which is N380m. Check: C = 50 + 0.75(380) = 50 + 285 = 335. Then C + I = 335 + 45 = 380 ✓. This matches Y. Answer: Option B, N380m. Note on units: The question gives the 50 without units, but it must be in the same units (millions) as I for the answer to match the options. Tip: For equilibrium income with Y = C + I, use the multiplier shortcut: Y = (a + I) / (1 − MPC) = (50 + 45) / (1 − 0.75) = 95 / 0.25 = 380. The multiplier here is 1/(1 − 0.75) = 4. Always add the autonomous parts first, then multiply.

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