Question

Calculate MPC from the following data about an economy which is in equilibrium National Income = 1500, Autonomous consumption expenditure = 300, Investment expenditure =100. 

Answer 1

We know that Y = C + I By putting value 

we get 1500 = C + 100 , C = 1500 -100 = 1400

C = c + b Y by putting value 1400 = 300 + b 1500

1400 -300 / 1500 = b = 0.73 

∴ MPC = 0.73