# macroeconomic

Can someone help me with this question pls..

A country has a factory and build two bulldozers at a total cost of \$320. The country also know that due to the miscalculation of demand, the factory had been unable to sell some of its output of baked cheesecake, causing stocks of unsold cheesecake to rise by \$40. It's recent economic policies unfortunately caused output on the island to fall to zero, but the residents still greedily consumed a total of \$760 worth of goods. When output rose again, residents carefully saved 20 cents out of every extra dollar of income. From all this data, how much is the country income?

Thanks a lot.

Take what you know (or should know), and use algebra to solve.
You know that total income = consumption + investment (Y=C+I) (no government sector or export sector in your example)
You know that investment must equal savings (S=I). So, Y=C+S
Investment is the sum of planned investment (the two bulldozers) and unplanned inventory adjustments (the cheesecake). So, I=320+40 = 360.
You are given the consumption function C=760 + .80*Y (Marginal propensity to consume is .80, marginal propensity to save is .20).

So, Y=C+I = 760+.80Y + 360.
Solve for Y

Icic..thanks for the help. I didn't know that 20 cents extra for every dollar of income is the MPS and that's why I don't know what the MPC is.

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