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5 October, 21:29

Real GDP is $8,000, autonomous consumption is $500, and planned investment spending is $200. The marginal propensity to consume is 0.8. (Scenario: Income-Expenditure Equilibrium) Look at the scenario Income-Expenditure Equilibrium. How much is unplanned inventory investment?

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  1. 5 October, 21:48
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    The correct answer is $900.

    Explanation:

    According to the scenario, the given data are as follows:

    GDP = $8,000

    Autonomous consumption = $500

    Investment spending = $200

    Marginal propensity = 0.8

    So, we can calculate the unplanned inventory investment by using following formula:

    GDP = (autonomous consumption + investment spending) + (marginal propensity * GDP) + Unplanned inventory investment

    So, $8,000 = $700 + (0.8 * $8,000) + Unplanned inventory investment

    $8,000 = $700 + $6,400 + Unplanned inventory investment

    $8,000 = $7,100 + Unplanned inventory investment

    So, Unplanned inventory investment = $8,000 - $7,100

    = $900
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Home » Business » Real GDP is $8,000, autonomous consumption is $500, and planned investment spending is $200. The marginal propensity to consume is 0.8. (Scenario: Income-Expenditure Equilibrium) Look at the scenario Income-Expenditure Equilibrium.
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