Given the consumption function C = R100 billion + 0.75 (R300 billion), the equilibrium level is equal to:

R100 billion

R225 billion

R300 billion

R325 billion

1 answer

To find the equilibrium level of consumption (C), we need to plug in the given values into the consumption function.

The consumption function is given by:

\[ C = \text{R}100 \text{ billion} + 0.75 \times (Y) \]

where \(Y\) is the national income or output. In this case, \(Y\) is R300 billion.

Substituting \(Y\) into the consumption function:

\[ C = R100 \text{ billion} + 0.75 \times R300 \text{ billion} \]

Calculating the second term:

\[ 0.75 \times R300 \text{ billion} = R225 \text{ billion} \]

Now, adding both parts together:

\[ C = R100 \text{ billion} + R225 \text{ billion} = R325 \text{ billion} \]

Therefore, the equilibrium level is equal to R325 billion.