Ig=Ig=80 S=-80 + 0.4Y (Advanced analysis) The equations refer to a private closed economy, where Ig is gross investment, S is saving, and Y is gross domestic product (GDP). The equilibrium GDP will be

Equilibrium Income = 400

Explanation:

Economy is at equilibrium where:

AD (i. e = C + I) = AS (i. e = C + S)

C + I = C + S

I = S

Given I = 80, S = - 80 + 0.4Y

Putting in formula,

80 = - 80 + 0.4Y

80 + 80 = 0.4Y

160 = 0.4Y

Y = 160/0.4

Y = 400