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Question
An economy is in equilibrium. Find investment expenditure:
National Income =1,000
Autonomous Consumption =100
Marginal propensity to consume =0.8
Solution
Given that
Y = Rs 1,000
`barC= Rs100`
c = 0.8
We know that
Y = C +I
`1000=barC+cY+1`
1,000 = 100 + 0.8 x 1,000 + I
1,000 = 900 + I
I = Rs 100
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