Calculate "Investment Expenditure" from the following data about an ec – InterviewSolution

InterviewSolution

1.

Calculate "Investment Expenditure" from the following data about an economy which is in equilibrium:National Income = 700Marginal Propensity to Consume = 0.8AutonomousConsumptionExpenditure = 70

Answer»

Y = C + I

we know, C = C bar + b(Y)

or Y = C bar + b(Y) + I

700 = 70 + 0.8(700) + I

or 700 = 70 + 560 + I

or I = 700 - 630

or I = 70

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