Question

Calculate marginal propensity to consume from the following data about an economy which is in equilibrium 

National Income = 2000 

Autonomous consumption expenditure = 200 

Investment Expenditure = 100 

Answer 1

At Equilibrium Y = C + I 

→ Y = c^‒ + b.Y + I 

→ 2000 = 200+b.(2000) + 100 

→ b = 1700/2000 = 0.85