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Given the following data for an economy, the value of the marginal propensity to invest is...

Given the following data for an economy, the value of the marginal propensity to invest is equal to:

Consumption = 50 + .75Y

Investment = 20 + .10Y

Government = 60

Taxes = .20Y

Group of answer choices

.20

.10

20

.75

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Answer #1

Ans. B) .10

Marginal propensity to invest is the ratio of change in the investment divided by the change in income.

MPI = change in Investment/change in Income

We have given the investment function,

Investment = 20 + .10Y

Where 20 represents the autonomous investment

And

.10 represents the value of the marginal propensity to invest.

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