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CBSE 2022 Class 12 Economics Delhi Set 1 (Term 2)

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Question : 3 of 21
Marks: +1, -0
"In an economy, the autonomous consumption is 100\text{₹}\,100 and Marginal Propensity to Consume (MPC) is 0.6. If the equilibrium level of Income is 2,000 , then the autonomous investment is 300\text{₹}\,300."
Justify the statement with valid calculation.
Solution:  
Given Information:
Autonomous consumption (C)=100(\overline{C})=100
Marginal Propensity to Consume (MPC)=0.6(\text{MPC})=0.6
Equilibrium level of Income( YY ) =2000=\text{₹}\,2000
Autonomous Investment (I)=300(I)=\text{₹}\,300
At equilibrium level, Y=C+IY=C+I
Thus,2000=1300+I\text{₹}\,2000=\text{₹}\,1300+I
I=(20001300)I=\text{₹}(2000-1300)
I=700I=\text{₹}\,700
At this level of income, YY should be 700\text{₹}\,700 but it is given 300\text{₹}\,300 which is not valid.
Working Note:
C=C+bYC=\overline{C}+bY
=100+0.6(2000)=\text{₹}100+0.6(2000)
=100+1200=\text{₹}100+1200
=1300=\text{₹}1300
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