An Economy is in equilibrium, calculate the Marginal ...

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

Question : 4 of 21

Marks: +1, -0

An Economy is in equilibrium, calculate the Marginal Propensity to Save (MPS) from the following:
(i) National Income (Y) =₹4,400
(ii) Autonomous Consumption (C)=₹1,000
(iii) Investment Expenditure (I) ‌‌=₹70

Solution:

‌ MPS ‌=‌ ? ‌
National Income (Y)=₹4400
Autonomous Consumption (C)=₹1000
Investment Expenditure (I)=₹70
Y‌=C+I
₹4400‌=C+₹70
C‌=₹4330
C‌=C+bY
4330‌=1000+b(4400)
(4330−1000)‌=4400b
‌

3330

4400

‌=b
(MPC)b‌=0.76
MPS‌=1−MPC
‌=1−0.76
‌=0.24

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