Calculate investment expenditure from the following data about an economy which is in equilibrium:
National Income = 1000
Marginal Propensity to Save = 0.25
Autonomous consumption expenditure = 200
Y = 1000, MPS = 0.25, $\overline{C}$ =200
MPC or b = 1 - MPS = 1 - 0.25 = 0.75
C = $\overline{C}$+67, C =200+0.75x1000, C =950
We know, Y = C + I, 1000 = 950+1,
I = 1000-950 = 50