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Question
An economy is in equilibrium. Find investment expenditure :
National income =1200
Autonomous consumption expenditure=150
Marginal Propensity to consume =0.8
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Solution
Given that
Y= Rs1,200
`barC=Rs150`
c=0.8
As we know that
Y= C + I
`1200=barC+cY+I`
1,200= 150+0.8x1,200+I
1,200=1,110+I
I=Rs90
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