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CBSE 2015 Class 12 Economics Delhi Set-1

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Question : 14 of 19
Marks: +1, -0
An economy is in equilibrium. Calculate national income from the following.
Autonomous consumption =100=100
Marginal propensity to save =0.2=0.2
Investment expenditure =200=200
Solution:  
Given
Autonomous consumption (C‾)=100(\overline{C})=100
MPS(s)=0.2\text{MPS}(s)=0.2
i.e. MPC(c)=1−MPS=1−0.2=0.8\text{MPC}(c)=1-\text{MPS}=1-0.2=0.8
  1=200\;1=200
  y=?\;y= ?
We know that at equilibrium,
  Y  =C+I\;Y\;=C+I
   i.e.     Y  =(C‾)+cY+I\;\text{ i.e. }\;\;Y\;=(\overline{C})+cY+I
⇒Y  =100+0.8Y+200\Rightarrow Y\;=100+0.8Y+200
⇒Y  =0.8Y+300\Rightarrow Y\;=0.8Y+300
⇒Y−0.8Y  =300\Rightarrow Y-0.8Y\;=300
⇒  0.2Y  =300\Rightarrow\;0.2Y\;=300
   so,     Y  =1,500\;\text{ so, }\;\;Y\;=1,500
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