View Full Version : Need help on macro question!!
04-17-2002, 12:00 PM
There is no international trade. Disposable income is 250, the marginal propensity to consume is 0.8. Total gov't spending is 30. If total income is 290, what is gross domestic investment? (How to pass gives answer = 60)
Thanks in advance!!
04-17-2002, 12:17 PM
Nevermind. I figured it out. For those who want the solution here is goes:
In this prob. GDP = total income = 290
C = Cy*DI = .8*250 = 200
I = gross domestic investment (that's what you are trying to find)
G = 30
(X-M) = 0
290 = 200 + I + 30
I = 60
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