An economy is in equilibrium. Calculate Marginal Propensity to consume: |
National income = 1000 |
Autonomous consumption expenditure = 200 |
Investment expenditure = 100 |
Answer:
National income = 1000 Autonomous consumption expenditure = 200 Investment expenditure =100 National Income = consumption + Investment Expenditure \[Y=C+cY+I\] \[1000=200+c\,\,(1000)+100\] \[1000=300+c(1000)\] \[1000300=c(1000)\] \[700=c\,(1000)\] \[c=700/1000\] \[c=0.7\] Marginal propensity to consume = 0.7.
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