Calculate Marginal Propensity to Consume from the following data about an economy which is in

equilibrium:

National Income = 2000

Autonomous consumption expenditure = 200

Investment expenditure =100

Given, Y = 2000 ,$\overline{C}$ = 200,I = 100

We know, Y = C +I, C = $\overline{C}$ +bY

Y = $\overline{C}$ +bY + I

For calculating MPC, we use following equation:

Y= $\overline{C}$ +bY + I

b = MPC

2000 =200 +2000 b +100

b = 2000 - 300 / 2000 = 1700 /2000 = 0.85

Thus, MPC = 0.85