#### 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?

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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.

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