Suppose, saving functions, S = -200 + 0.3Y , Investment function, I = 100 + 0.1Y . i. Determine equilibrium output, saving and investment. ii. What…
BBS Macroeconomics for Business · 2082 · Solved Question with Answer
Suppose, saving functions, S = -200 + 0.3Y, Investment function, I = 100 + 0.1Y.
i. Determine equilibrium output, saving and investment.
ii. What will be the effect on equilibrium output saving and investment when (a) planned saving increases by Rs. 40 billions and (b) MPS increases to 0.4?
iii. Do these conditions reflect paradox of thrift? Give reasons.