Consumption function of an economy is given by C = 200 + 0.75Y and autonomous investment expenditure is Rs 500 crore. Determine the equilibrium level of GDP.

We are given,

Consumption function (C) = 200 + 0.75 Y
Autonomous investment (I0) = Rs 500 crore.
We know that equilibrium real GDP is determined where aggregate output is equal to aggregate expenditure. That is:
                                      Y = AE
=>                                  C = 100 + 0.80Y
Further,
A autonomous consumption (α) = 100 (since Autonomous saving = -100)
Marginal propensity ot consume ( ) = 0.8 (since MPS = 0.2)
At equilibrium,

                                         Y = α + I₀ 
                                               1- ß

Putting the values of  α, ß  and I₀
                                   Y = 100 +100
                                           1- 0.8
                                     
=>                                   Y = 200
                                         0.2

=>                                   Y = Rs 1,000 crore
Thus, equilibrium GDP is Rs. 1,000 crore