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Question
Find equilibrium national income:
Autonomous consumption expenditure = 120
Marginal propensity to consume = 0.9
Investment expenditure = 1100
Solution
Given that
I = Rs 1100
Marginalpropensity toconsume 0.9
`barC` = Rs 120
Y = ?
As we know that
Y = C + I
Y = `barC+`
Y = 120 + 0.9 x Y + 1100
Y = 0.9 x Y + 1220
Y = 12,200
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(6) | Inelastic demand | |
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(7) | Luxurious commodities |
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(8) | Dr. Marshall |
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