Calculate Marginal Propensity to Consume from the following data a – InterviewSolution

InterviewSolution

1.	Calculate Marginal Propensity to Consume from the following data about an economy which is in equilibrium:National Income = 2,000Autonomous Consumption Expenditure = 200Investment Expenditure = 100
Answer» Y = C + I we know, C = C bar + b(Y) ∴ Y = C bar + b(Y) + I or 2,000 = 200 + b(2,000) + 100 or 2,000 - 300 = 2,000b 2,000b = 1,700 b = 1,700/2,000 = 0.85

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