Question

Hey buddy

Find the MPS ,in equilibrium economy while national income is 500 , autonomous saving is -30 and investment expenditure is 70 __

Answer 1

Heya...

Solution :-
___________

Given ____

National income ( Y ) = 500
Autonomous saving = -30
Investment (I) = 70

At equilibrium level ...

S = I

Autonomous saving + MPS (Y) = I
-30+MPS(500) = 70
500(MPS) = 70+30
500(MPS) = 100

MPS = 100/500

= 0.2 Answer ...

Thank you

Answer 2

Given
National income ( Y ) = 500
Autonomous saving = -30
Investment (I) = 70
At equilibrium level ...
S = I
Autonomous saving + MPS (Y) = I
-30+MPS(500) = 70
500(MPS) = 70+30
500(MPS) = 100
MPS = 100/500
= 0.2