Question

From the data given below for an Economy, Calculate 

(a) Investment Expenditure ; 

(b) Consumption Expenditure 

Equilibrium level of Income = 5000 

Autonomous Consumption = 500 

Marginal propensity to consume = 0.4

Answer 1

C = c^‒ +b.Y 

C = 500 + (0.4) x 5000 

= 2500 

I = Y - C 

= 5000 - 2500 

= 2500