Question 101

To find the equilibrium expenditure (Y), you need to set the total spending (consumption + investment) equal to the output (Y). The consumption function is given as:

\[ C = 10 + 0.8Y \]

Planned investment (I) is R15. At equilibrium, total spending (Y) equals consumption (C) plus investment (I):

\[ Y = C + I \]

Substituting the consumption function into the equilibrium condition:

\[ Y = (10 + 0.8Y) + 15 \]

Now simplify the equation:

\[ Y = 25 + 0.8Y \]

Next, isolate Y by subtracting 0.8Y from both sides:

\[ Y - 0.8Y = 25 \]

This simplifies to:

\[ 0.2Y = 25 \]

Now, divide both sides by 0.2 to solve for Y:

\[ Y = \frac{25}{0.2} \]
\[ Y = 125 \]

Thus, the equilibrium expenditure is **R125**.

So the answer is:

**R125**