Questions:
Calculate MPC from the following:
Equilibrium income-. ₹350
consumption expenditure at zero income. ₹20
investment. ₹50
Solution:
Given,
Y=350
Ç=20
I=50
we know,
C=Y-I
C=350-50
C=300
Again,
C=ç+by
300=20+b(350)
300=20+350b
350b=300-20
350b=280
b=280/350
b=0.8
.·. MPC=0.8
