CBSE 2015 Class 12 Economics Outside Delhi Set-2

Question : 2

Total: 3

An economy is in equilibrium. Calculate the Marginal Propensity to Save from the following:
National income =1,000
Autonomous consumption =100
Investment =120

Solution:

Given :
National Income (Y)=1000
Autonomous Consumption (a) =100
Investment (I)=120
Y‌=C+1
C‌=a+bY
Y‌=100+b×1000+120
1000−120‌=100+b
880‌=100+1000b
880−100‌=1000b
780‌=1000b
b‌=‌

780

1000

=0.78
∴‌‌‌ MPC ‌‌=0.78
‌ MPS ‌‌=1−‌ MPC ‌
‌=1−0.78
‌=0.22

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