An economy is in equilibrium. Calculate the Investment Expenditure from the following: |
National Income = 800 |
Marginal Propensity to Save = 0.3 |
Autonomous Consumption =100 |
Answer:
Given
Y = 800
MPS(s) = 0.3
i.e. \[MPC\left( c \right)=1-MPS=1-0.3=0.7\]
C = 100
We know that at equilibrium,
\[Y=C+I\]
\[C=ab+by\]
\[=100+0.7y\]
By putting the value of Y & C
\[800=100+0.7(800)+I\]
\[800=100+560+I\]
\[I=800-660\]
I= Rs. 140
Thus, the Investment expenditure is Rs. 140.
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