In an economy investment expenditure is 1,000, autonomous consumption is 500 and marginal propensity to save is 0.2.

Question

In an economy investment expenditure is 1,000, autonomous consumption is 500 and marginal propensity to save is 0.2.

In an economy investment expenditure is 1,000, autonomous consumption is 500 and marginal propensity to save is 0.2. Calculate its equilibrium level of income.

Monjur Alahi

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2025-01-04 04:42

1 Answers

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Salim Ahmed Kawsar · Accepted Answer · 2023-02-05T15:29:48+06:00

Salim Ahmed Kawsar

Y = C + (1 - MPS)Y + I

Y = 500 + (1 - 0.2)Y + 1,000

0.2Y = 1,500, Y = 7,500

6 views Answered 2023-02-05 15:29