If the level of autonomous expenditures is equal to $6000 billion and the marginal propensity to expend is equal to .6, the equilibrium level of national income (Y) is equal to
A) $15000 billion.
B) $10000 billion.
C) $3600 billion.
D) $2400 billion.

Question

Quizplus · Accepted Answer

The equilibrium level of national income (Y) can be calculated using the formula Y = Autonomous Expenditures / (1 - Marginal Propensity to Expend). Plugging in the given values, Y = $6000 billion / (1 - 0.6) = $6000 billion / 0.4 = $15000 billion.

If the Level of Autonomous Expenditures Is Equal to $6000