Calculate investment expenditure from the following date about an economy which is in equilibrium. |
National Income = 1000 |
Marginal propensity to save = 0.20 |
Autonomous consumption expenditure = 100 |
Answer:
Given, National Income (Y) = 1000 Marginal propensity to save (MPS) = 0.20 Autonomous consumption expenditure = 100 \[MPC\left( c \right)=1-MPS-1-0.20=0.8\] As we know in equilibrium, \[Y=C+I\] Since, \[C=C+cY\] We \[Y=C+cY+I\] \[1000=100+0.8(1000)+1\] \[1000=900+I\] \[\Rightarrow \] \[1=100\] Therefore, investment expenditure is Rs. 100.
You need to login to perform this action.
You will be redirected in
3 sec