AN ECONOMY IS EQUILIBRUM . But
CALCULATE AUTO No Mous CONSUMPTION
IE INCOME RS 5ooo, MARGINAL
PROPENSITY TO SAVE IS 0.2 AND
INVESTMENT EXPENDITURE 8000
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Answer:If MPS= 0.2, then MPC=1- MPS= 1-0.2= 0.8.Consumption Function is C = 100+ 0.8 Y where Y in the income in the economy. At equilibrium level of income, AS=ADY= C+I => Y= 100 + 0.8 Y + 200=> Y - 0.8 Y = 100 + 200=> 0.2 Y = 300=> Y = 300/ 0.2 = Rs.1,500.
Explanation:
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