Calculate investment expenditure from the following data about an economy which is in equilibrium : National Icome = 1000, MPs = 0.2, Autonomous consumption expenditure = 100

Explanation

`Y = C +I` (at equilibrium )
or `Y = (barC + bY) +1`
` 1000 =100 + 0 .8(1000) +1" " (MPC = 1- MPS rArr 1- 0.2 =0.8)`
`1000 = 100 + 800 +I`
`I = 1000-900 = 100`
Hence investment expenditure = 100.