Question
An economy is in equilibrium. Calculate Marginal Propensity to Consume:
National income = 1000
Autonomous consumption expenditure = 200
Investment expenditure = 100
Solution
Given that
National income (Y) 1000
Autonomous consumption expenditure 
Investment expenditure (I) = 100
As we know that
National Income = Consumption + Investment expenditure
where c is marginal propensity to consume
1,000 = 200 + c(1,000) + 100
700 = c(1,000) + 100
700 = c(1,000)
c = 0.7
Hence, marginal propensity to consume is 0.7
