Consider two economies (1 and 2) where in equilibrium, the level of aggregate income is the sum of aggregate investment expenditure and aggregate consumption expenditure . is determined autonomously of and its value in economy 1 is double that in economy 2. If the marginal propensity to save in economy 1 is half that in economy 2 for all values of , then the equilibrium value of in economy 1 is
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Consider two economies (1 and 2) where in equilibrium, the level of aggregate income (Y) is the sum of aggregate investment expenditure (I) and aggregate consumption expenditure (C). I is determined autonomously of Y and its value in economy 1 is double that in economy 2. If the marginal propensity to save in economy 1 is half that in economy 2 for all values of Y, then the equilibrium value of Y - C in economy 1 is (A) double that in economy 2 (B) half that in economy 2 (C) the same as that in economy 2 (D) None of the above
Keynesian cross and the multiplier has come up 167 times in 7 exams since 2006.
This question is on Keynesian cross equilibrium, part of Keynesian cross and the multiplier in Macroeconomics.
How income is determined when output adjusts to planned spending, and what happens to unplanned inventories.
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Question from the JNU SSS 2013 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.