Question

3 Calculate investment expenditure from the following data about an economy which is in equilibrium :
National Income = 1000
Marginal propensity to save = 0.25
Autonomous consumption expenditure 200​

Answer 1

Explanation:

If MPS= 0.25, then

MPC= 1- MPS= 1- 0.25= 0.75.

Consumption Function is C = 200+ 0.75 Y where Y in the income in the economy.

At equilibrium level of output,

AS=AD

Y= C+I

=> 1000 = 200 + 0.75 (1,000) + I

=> 1000 = 200+ 750 + I

=> 1000 = 950 + I

=> I = Rs. 50

Answer 2

Explanation:

Hope this helps you

the answer is :-

Rs.50