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CBSE 2017 Class 12 Economics Delhi Set-1

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Question : 13 of 18
Marks: +1, -0
An economy is in equilibrium. From the following data about an economy, calculate autonomous consumption.
(a) Income =5000=5000
(b) Marginal propensity to save =0.2=0.2
(c) Investment expenditure =800=800
Solution:  
Given that, Income (y)=5000(y)=5000
Marginal Propensity to save (s)=0.2(s)=0.2
Therefore, marginal propensity to consume
=1−   MPS =1-\;\text{ MPS }
=1−0.2=0.8=1-0.2=0.8
∴    Y=C+by+I\therefore\;\; Y=C+b y+I
⇒    5000=C+0.8×5000+800\Rightarrow\;\; 5000=C+0.8 \times 5000+800
⇒5000=C+4000+800\Rightarrow 5000=C+4000+800
⇒    5000=C+4800\Rightarrow\;\; 5000=C+4800
⇒    5000−4800=C\Rightarrow\;\; 5000-4800=C
⇒200=C\Rightarrow 200=C
⇒\Rightarrow Autonomous Consumption =200=200
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