hayhay2012
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Does anyone know how to do this question? Calculating equilibrium level of income? (1 Viewer)
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deswa1
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Re: Does anyone know how to do this question? Calculating equilibrium level of income
1. Notice that when income increases by 100, consumption increases by 50. Therefore the MPC=MPS=0.5
2. Therefore the multiplier is 2
3. Going from 200 consumption to 300 consumption will therefore lead to a (100)x2 increase in income due to the multiplier effect
4. 600+200=800
1. Notice that when income increases by 100, consumption increases by 50. Therefore the MPC=MPS=0.5
2. Therefore the multiplier is 2
3. Going from 200 consumption to 300 consumption will therefore lead to a (100)x2 increase in income due to the multiplier effect
4. 600+200=800