Explain briefly?? soon
Solution
false
false
Investment = Rs 360
MPS = 0.3
MPS + MPC = 1
0.3 + MPC = 1
MPC = 0.7
Y = 1400 crores
MPS = 0.3
MPS + MPC = 1
0.3 + MPC = 1
MPC = 0.7
Y = 1400 crores
C = a + by
a is an autonomous consumption, b is an marginal propensity to consume (MPC), y is an income
C = 40 + 0.7(1400)
C = 40 + 980
C = 1020 crore
C = 40 + 980
C = 1020 crore
Equilibrium is at Y = C + I
Y = 1400 crores
C + I = 1020 + 360
C + I = 1380 crores
C + I = 1380 crores
Equilibrium condition is not satisfied.