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SECTION-B
An economy is in equilibrium. From the following data, calculate autonomous consumption.
(i) Income= 10000
(ii) Marginal propensity to save= 0 . 2
(iii) Investment= 1500
(Macro-economics)
An economy is in equilibrium. From the following data, calculate autonomous consumption.
(i) Income
(ii) Marginal propensity to save
(iii) Investment
Solution:
(a) Income = 10 , 000
(b) Marginal Propensity to save= 0.2
(c) Investment = 1500
Y = C + I
10 , 000 = C + 1500
C = 8500
MPC = 1 − MPS
= 1 − 0.2
= 0.80
C = c + by
8500 = c + 0.80 × 10 , 000
8500 = c + 8000
c = 8500 − 8000
= ₹ 500
(b) Marginal Propensity to save
(c)
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