question_answer

An economy is in equilibrium. From the following data about an economy calculate investment expenditure:

(i) Income = 10000

(ii) Marginal propensity to consume =0.9

(iii) Autonomous consumption =100

Answer:

\[C\,\,=\,\,\,\,\overline{c\,}+bY\]

\[=\,\,100+\frac{0.9}{10}\times \,10000\]

\[C\Rightarrow \,\,\text{Rs}\text{.}\,\,9.100\]

\[\text{Investment}\,\,+\,\,=\,\,Y\,\,-\,\,C\]

\[\Rightarrow \]\[10,000\,\,-\,\,9,100\]

\[\Rightarrow \]Rs. 900