Question

An economy is in Equilibrium. 

Calculate the MPS from the following: 

National Income = 1000 

Autonomous Consumption = 100 

Investment = 120 

Answer 1

C = Y - I 

= 1000 - 120 = 880 

C = c^‒ + b.Y 

→ 880 = 100 + b.1000 

→ b = 780/1000 

= 0.78