Last Activity: 4 Years ago
If MPS=0.20, then
MPC= 1-MPS= 1-0.20= 0.80
Consumption Function is C = c + 0.80 Y where Y in the income in the economy and c= Autonomous consumption.
At equilibrium level of output,
AS=AD
Y= C+I
=> 1,200 = c + 0.80 (1,200) + 100
=> 1,200 = c+ 960 + 100
=> 1,200 = c+ 1,060
=> c = 1,200- 1,060 = Rs.140
thank you
Last Activity: 4 Years ago
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