Question

Consider the following  information:  

Marginal propensity to consume = 0,9

Investment = R180 million

Autonomous consumption = R105 million. The equilibrium level of income is:-

Question 2 options:

1800 million.

2800 million.

0,9Y.

2850 million

Answer 1

$Y=Ca+MPC\times Y+I$

$Y=105+0.8\times Y+180$

$Y-0.8\times Y=285$

0.2Y=285

Y=1425