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CBSE 2014 Class 12 Economics Outside Delhi Set-2

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Question : 3 of 4
Marks: +1, -0
Calculate investment expenditure from the following data about an economy which is in equilibrium.
National Income =1000=1000
Marginal propensity to save =0.20=0.20
Autonomous consumption expenditure =100=100
Solution:  
Given,
National Income (Y)=1000(Y)=1000
Marginal propensity to save (MPS) =0.20=0.20
Autonomous consumption expenditure =100=100
MPC (c)=1−(c)=1- MPS =1−0.20=0.8=1-0.20=0.8
As we know in equilibrium,
Since, Y=C+IY = C + I
We C=C+cYC = C + cY
  Y=C+cY+I\; Y = C + cY + I
  1000=100+0.8(1000)+I\;1000 = 100 + 0.8(1000) + I
  1000=900+I\;1000 = 900 + I
⇒I  =100\Rightarrow I\; = 1 0 0
Therefore, investment expenditure is ₹100\text{₹} 100 .
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