If X is an autonomous $150 and the MPM is 0.1,what is the value of X_N at an income of $1,000? A)+$50. B)+$100. C)+$150. D)-$100.

Question

Quizplus · Accepted Answer

Autonomous expenditure (X) = $150 MPM (marginal propensity to import) = 0.1 At an income of $1,000, we can calculate the equilibrium level of income by using the formula: Y = (1/1-MPC) * X where MPC (marginal propensity to consume) = 1 - MPM = 0.9 So, Y = (1/0.9) * $150 = $166.67 Now, we can calculate the value of X_N using the formula: X_N = MPM * (Y - X) = 0.1 * ($166.67 - $150) = $1.67 Therefore, at an income of $1,000, X_N is equal to $1.67, which is closest to $50 (option A).

If X Is an Autonomous $150 and the MPM Is