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siniylev [52]
1 year ago
3

the marginal propensity to expend is .7. autonomous expenditures are $3,800. what is the level of equilibrium income in the econ

omy?
Business
1 answer:
Airida [17]1 year ago
5 0

Equilibrium income in the economy is $5428.5

The marginal propensity to expend is the ratio of change in aggregate expenditure to change in income. It implies that change in income effects expenditure. The marginal propensity to consume implies a change in consumption due to a change in income.

The equilibrium level of the national income is defined as that point where the aggregate supply and the aggregate demand are equal to each other.

Marginal propensity to expend = 0.7

Autonomous expenditures = $3,800

Equilibrium income = ?

According to the formula,

MPC = dC / dY

Y = (Equilibrium income)

0.7 = 3800 / Y

Y = 3800 / 0.7

= 5428.5

For more information on Equilibrium income, visit :

brainly.com/question/13034122

#SPJ4

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