Option 1 -> Incorrect. This is only part of the autonomous expenditure (C₀ + I = 120 + 20 = 140), not the equilibrium income.
Option 2 -> Correct. Using Y = C + I, we get Y = 120 + 0.5Y + 20, solving gives Y = 280.
Option 3 -> Incorrect. This value is too high and doesn't satisfy the equilibrium condition.
Option 4 -> Incorrect. This is an expression, not a numerical value for equilibrium income.
Hence, Option 2: 280 -> In equilibrium, Y = C + I. Substituting: Y = (120 + 0.5Y) + 20 → Y = 140 + 0.5Y → 0.5Y = 140 → Y = 280. The multiplier is 1/(1-MPC) = 1/(1-0.5) = 2, and autonomous expenditure is 140, so Y = 2 × 140 = 280 -> correct