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In a simlple economy with no government and foreign sector, autonomous consumer spending is $250 and planned investment spending is $500. The marginal propensity to
In a simlple economy with no government and foreign sector, autonomous consumer spending is $250 and planned investment spending is $500. The marginal propensity to consume is .80. What is the income-expenditure equilibrium for the company?
Y=250 + .8(Y) +500
.2Y=750
Y=3,750
Where does the .2 come from?
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