Question

Calculate Investment expenditure:

National income = 700

Autonomous consumption = 70

MPC = 0.8

OR

Calculate equilibrium level of income from the following:

Consumption expenditure at zero level of income = 60

MPC = 0.9

Investment =100

Answer 1

$AD=C+I$

$C=70+0.8Y$

Income=$70+0.8Y+I$

$700=70+0.8\left(700\right)+I$

Investment =$700-630=70$

OR

Calculate equilibrium level of income from the following:

$C+I=Y$

$69+0.9Y+100=Y$

$160=0.1Y$

Income =1600 Crores