An economy is in equilibrium. Calculate the marginal propensity to sav

1.	An economy is in equilibrium. Calculate the marginal propensity to save from the following: National Income = 1000 ,Autonomous Consumption = 100 ,Investment =120
Answer» At equilibrium : AD = AS OR C+ I = Y (c+ b Y) + I = Y (100 + b. 1000) + 120 = 1000 1000 -220 = 1000 b b= 780/1000 = 0.78 MPS = 1 – 0.78 ( MPC+MPS =1) MPS = 0.22

An economy is in equilibrium. Calculate the marginal propensity to save from the following: National Income = 1000 ,Autonomous Consumption = 100 ,Investment =120

Answer»

At equilibrium : AD = AS OR C+ I = Y (c+ b Y) + I = Y

(100 + b. 1000) + 120 = 1000

1000 -220 = 1000 b

b= 780/1000 = 0.78

MPS = 1 – 0.78 ( MPC+MPS =1)

MPS = 0.22

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An economy is in equilibrium. Calculate the marginal propensity to save from the following: National Income = 1000 ,Autonomous Consumption = 100 ,Investment =120

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