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Question : 14
Total: 19
Calculate investment expenditure from the following data about an economy which is in equilibrium :
National income= 1000
Marginal propensity to save= 0.25
Autonomous consumption expenditure= 200
National income
Marginal propensity to save
Autonomous consumption expenditure
Solution:
We know,
Y = C + I
C = c + c Y
∴ Y = c + c Y + 1
Wherec =
c =
( 1 − MPS = 1 − 0.25 = 0.75 )
Y = = ₹ 1000
I = Investment expenditure by putting the value
1000 = 200 + 0.75 × 1000 + I
I = 1000 − ( 200 + 750 )
= 1000 − 950
I = ₹ 50
Where
I = Investment expenditure by putting the value
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