#### Question

An economy is in equilibrium. Calculate the Investment Expenditure from the following

National Income = 800

Marginal propensity to save = 0.3

Autonomous Consumption = 100

#### Solution

Given that

National Income(Y) = 800

Marginal Propensity Save = 0.3

Therefore,

MPC = 1 - MPS

= 1 - 0.3 = 0.7

`barC = 100`

We know that

Y = C + I

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

800 = 100 + 0.7 x 800 + I

I = 140

Thus, the investment expenditure is Rs 140.

Is there an error in this question or solution?

Solution An Economy is in Equilibrium. Calculate the Investment Expenditure from the Following National Income = 800 Marginal Propensity to Save = 0.3 Autonomous Consumption = 100 Concept: Consumption Function and Propensity to Save.