CBSE 2014 Class 12 Economics Delhi Set-1

Question : 14 of 19

Marks: +1, -0

Calculate investment expenditure from the following data about an economy which is in equilibrium :
National income

=1000

Marginal propensity to save

=0.25

Autonomous consumption expenditure

=200

Solution:

We know,

\;Y=C+I

\;C=\ov{c}+c Y

∴ \;Y=\ov{c}+c Y+1

Where

\ov{c}=

autonomus consumption (200)

c=

marginal propensity to consume

(1- {\MPS}=1-0.25=0.75)

{\Y}=

national income

=\₹ 1000

I = Investment expenditure by putting the value

1000\;=200+0.75 × 1000+I

I\;=1000-(200+750)

\;=1000-950

I\;=\₹ 50

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