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CBSE 2014 Class 12 Economics Outside Delhi Set-3

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Question : 4 of 5
Marks: +1, -0
Calculate Autonomous Consumption Expenditure from the following data about an economy which is in equilibrium:
National income =500=500
Marginal Propensity to save =0.30=0.30
Investment expenditure =100=100
Solution:  
Given:
National income, Y=500Y=500
   MPS   =0.30\;\text{ MPS }\;=0.30
Investment expenditure, I=100I=100
Marginal propensity to consume, MPC =1−=1- MPS
=1−0.30=0.70=1-0.30=0.70
We know that, Y=C+I......AD=ASY = C + I . . . . . . AD = AS and AD=CT]AD = CT]
⇒Y  =C‾+b(Y)+I\Rightarrow Y\;=\overline{C}+b(Y)+I   .......[QC=C‾+1]\;. ..... .[ QC=\overline{C}+1]
⇒   500  =C‾+0.70(500)+100\;500\;=\overline{C}+0.70(500)+100
C‾  =500−350−100\overline{C}\;=500-350-100
C‾  =50\overline{C}\;=50
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