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With A = 50, MPS = 0.2 and Y = 4000 crore, what is ex ante aggregate demand?
ARs 3250 crore
BRs 4050 crore
CRs 800 crore
DRs 4000 crore
Answer & Solution
Correct answer: A. Rs 3250 crore
AD = A + cY = 50 + 0.8 x 4000 = 3250 crore, below income of 4000, so the economy is not in equilibrium.
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