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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=₹(2000−1300)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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