# Equation: If the equilibrium level of GDP is $21,500, what is the marginal propensity to consume? Equations for C, I, G, and NX are given below. If the equilibrium level of GDP is$21,500, what is the marginal propensity to consume?

C = 1,500 + (MPC)Y I = 1,000 G = 2,000 NX = -200

• Please provide your tentative solution so that we can get what is not clear to you – PhDing Jun 11 '18 at 7:59

In equilibrium,

Y = AD ________________________ ( eq 1)

AD= C + I + G + NX

AD= 1,500 + cY + 1,000 + 2,000 - 200

Or AD = 4,300 +cY Or Y = 4,300 +cY ------(from 1)

Or (1-c)Y=4,300

Or 1-c = 4,300/Y = 4,300/21,500 = 0.2

Or 1-c = 0.2

Or c = 0.8

Hope this helps