Investment function and saving function of an economy are: I = 120 + 0.2Y and S = -30 + 0.4Y respectivelya. Compute equilibrium level of income,…
BBS Macroeconomics for Business · 2079 · Solved Question with Answer
Investment function and saving function of an economy are:
I = 120 + 0.2Y and S = -30 + 0.4Y respectivelya. Compute equilibrium level of income, saving and investment.b. If autonomous saving increases by Rs. 40 billion, what will be the effect on income, saving and investment?c. What will be the effect on income, saving and investment when MPS increases to 0.5?d. Compare the results of 'b' and 'c' with the result of 'a' and verify the condition of the Paradox of Thrift.