Question

An economy is in equilibrium. Find investment expenditure: 

National Income =1,000

Autonomous Consumption =100

Marginal propensity to consume =0.8

Answer 1

Given that

Y =  Rs 1,000

`barC= Rs100`

c = 0.8

We know that

Y = C +I

`1000=barC+cY+1`

1,000 = 100 + 0.8 x 1,000 + I

1,000 = 900 + I

I = Rs 100