Question

An economy is in equilibrium. Calculate the Marginal Propensity to Save from the following:
National Income = 1000
Autonomous Consumption = 100
Investment = 120

Answer 1

Given that
National Income (Y) = 1000
Autonomous consumption = 100
Investment = 120
We know that

Y = C + I

`Y = barC + MPC(Y) + I`

Therefore,

1000 =  100 +  MPC x  1000 + 120

MPC = 0.78

Marginal Propensity to Save =(1 - Marginal Propensity to Consume)

= (1 - 0.78) = 0.22