Test Index

CBSE 2015 Class 12 Economics Delhi Set-2

© examsnet.com
Question : 2 of 3
Marks: +1, -0
An economy is in equilibrium. Find 'autonomous consumption' from the following:
National income =1,000=1,000
Marginal propensity to consume =0.8=0.8
Investment expenditure =100=100
Solution:  
Given
Y  =1,000Y\;=1,000
MPC(c)  =0.8MPC(c)\;=0.8
I=100I=100
Autonomous consumption (C‾)=(\overline{C})= ??
We know that at equilibrium,
  Y  =C+I\;Y\;=C+I
   i.e.     1,000  =C‾+cY+I\; \text{ i.e. }\;\;1,000\;=\overline{C}+cY+I
⇒1,000  =C‾+0.8×1,000+100\Rightarrow 1,000\;=\overline{C}+0.8 \times 1,000+100
⇒1,000  =C‾+900\Rightarrow 1,000\;=\overline{C}+900
⇒1,000−900  =C‾\Rightarrow 1,000-900\;=\overline{C}
   so,     C‾  =100\; \text{ so, }\;\;\overline{C}\;=100
© examsnet.com
Go to Question:
Prev Question
Next Question