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Question : 3
Total: 21
"In an economy, the autonomous consumption is ₹ 100 ₹ 300
Justify the statement with valid calculation.
Justify the statement with valid calculation.
Solution:
Given Information:
Autonomous consumption( C ) = 100
Marginal Propensity to Consume( MPC ) = 0.6
Equilibrium level of Income(Y = ₹ 2000
Autonomous Investment( I ) = ₹ 300
At equilibrium level,Y = C + I
Thus,₹ 2000 = ₹ 1300 + I
I = ₹ ( 2000 − 1300 )
I = ₹ 700
At this level of income,Y ₹ 700 ₹ 300
Working Note:
C = C + b Y
= ₹ 100 + 0.6 ( 2000 )
= ₹ 100 + 1200
= ₹ 1300
Autonomous consumption
Marginal Propensity to Consume
Equilibrium level of Income(
Autonomous Investment
At equilibrium level,
Thus,
At this level of income,
Working Note:
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