CBSE 2023 Class 12 Economics Delhi Set 1

Question : 7

Total: 49

If in an economy, the Investment Multiplier is 4 and Autonomous Consumption is ₹30 crore, the relevant consumption function would be ________.
(Fill up the blank with correct alternative)

C=30+0.75Y
C=(−)30+0.25Y
C=30+0.25Y
C=(−)30−0.25Y

Solution:

(a) C=30+0.75Y
Explanation: Investment Multiplier (k)=4
Autonomous Consumption (C)=₹30 crore
K‌=‌

1−MPC

4‌=‌

1−MPC

MPC‌=‌

MPC‌=0.25
MPC‌=1−0.25
MPC‌=0.75
Consumption Function:
‌C=C+MPC(Y)
‌C=30+0.75Y

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