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