Question

How to calculate investment expenditue

Answer 1

Calculate investment expenditure from the following data about an economy which is in equilibrium:

National Income =1000

Marginal Propensity to Save = 0.20

Autonomous consumption expenditure =100

Calculate investment expenditure from the following data about an economy which is in equilibrium:

National Income =1000

Marginal Propensity to Save = 0.20

Autonomous consumption expenditure =100

Answer 2

Formula: Y = C + I + G + (X – M); where: C = household consumption expenditures / personal consumption expenditures, I = gross private domestic investment, G = government consumption and gross investment expenditures, X = gross exports of goods and services, and M = gross imports of goods and services.

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