An economy is in equilibrium. Calculate the national Income from the following: |
Autonomous Consumption = 120 |
Marginal Propensity to Save = 0.2 |
Investment Expenditure = 150 |
Answer:
\[a=120\] MPS = 0.20 (b) \[MPC=1-MPS=10.20=0.86\] I = 150 Y =? \[Y=C+I\] \[C=a+by\] \[=120+0.8Y\] \[Y=120+0.8Y+150\] \[1Y0.8Y=270\] \[0.2Y=270\] \[\therefore \] \[Y=\frac{270}{0.20}=1350\]
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