CBSE 2015 Class 12 Economics Delhi Set-1

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Question : 14
Total: 19
An economy is in equilibrium. Calculate national income from the following.
Autonomous consumption =100
Marginal propensity to save =0.2
Investment expenditure =200
Solution:  
Given
Autonomous consumption (C)=100
MPS( s)=0.2
i.e. MPC(c)=1MPS=10.2=0.8
1=200
y=?
We know that at equilibrium,
Y=C+I
i.e. Y=(C)+cY+I
Y=100+0.8Y+200
Y=0.8Y+300
Y0.8Y=300
0.2Y=300
so, Y=1,500
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