Equilibrium level of income refers to the point at which aggregate demand (AD) equals aggregate supply (AS) in an economy. In other words, it is the level of income at which there are no unplanned changes in inventories. To calculate the equilibrium level of income, we need to consider the components of aggregate demand and aggregate supply.

Components of Aggregate Demand (AD):
AD = C + I + G + (X - M)

- Consumption (C): It represents the total spending by households on goods and services. It is dependent on disposable income and follows a consumption function.
- Investment (I): It represents the total spending by businesses on capital goods, such as machinery and equipment, and residential construction.
- Government Spending (G): It includes all the spending by the government on goods and services.
- Net Exports (X - M): It represents the difference between exports (X) and imports (M).

Given information:
a) Autonomous Investment (I) = 800 crores
b) Consumption function (C) = 100 + 0.80Y

Calculating Equilibrium Level of Income:
To calculate the equilibrium level of income, we equate AD and AS.

AS = AD
Y = C + I + G + (X - M)

Substituting the given values:
Y = (100 + 0.80Y) + 800 + G + (X - M)

Simplifying the equation:
Y = 100 + 0.80Y + 800 + G + X - M

Rearranging the equation:
0.20Y = 900 + G + X - M

Simplifying further:
Y = (900 + G + X - M) / 0.20

The equilibrium level of income (Y) is determined by the sum of autonomous spending (900) and the government spending (G), exports (X), and imports (M) in the economy. Dividing this sum by the multiplier (0.20) gives us the equilibrium level of income.

Key Points:
- Equilibrium level of income is the point where aggregate demand equals aggregate supply.
- Components of aggregate demand include consumption, investment, government spending, and net exports.
- Autonomous investment is the investment that does not depend on the level of income.
- Consumption function represents the relationship between consumption and income.
- To calculate the equilibrium level of income, we equate aggregate demand and aggregate supply and solve for income.
- The equilibrium level of income is determined by the sum of autonomous spending and other components of aggregate demand, divided by the multiplier.