Question

Find equilibrium national income:

Autonomous consumption expenditure = 120

Marginal propensity to consume = 0.9

Investment expenditure = 1100

Answer 1

Given that

I = Rs 1100

Marginalpropensity toconsume 0.9

`barC` = Rs 120

Y = ?

As we know that

Y = C + I

Y = `barC+`

Y = 120 + 0.9 x Y + 1100

Y = 0.9 x Y + 1220

Y = 12,200