Question 2(10 marks)

In the case of two-sector economy, the following is given:

Saving function, S

= -400 + 0.3Y

Investment, I

=RM 250

a) Determine the values of the MPS and MPC. (2 marks)

b) Write the consumption function.(2 marks)

c) Calculate the equilibrium income for this economy by using the leakages and injections approach and aggregate demand and aggregate supply approach. (6 marks)