CBSE 2014 Class 12 Economics Outside Delhi Set-3

Question : 4 of 5

Marks: +1, -0

Calculate Autonomous Consumption Expenditure from the following data about an economy which is in equilibrium:
National income

=500

Marginal Propensity to save

={0 . 3 0}

Investment expenditure

=100

Solution:

Given:
National income,

Y=500

\;\text " MPS "\;=0.30

Investment expenditure,

{\I}=100

Marginal propensity to consume, MPC

=1-

MPS

=1-0.30=0.70

We know that,

{\Y}= {\C}+ {\I} . . . . . . {\AD}= {\AS}

and

{\AD}= {\CT}]

⇒ {\Y}\;=\ov{ {\C}}+b( {\Y})+I

\;. ..... .[ {\QC}=\ov{ {\C}}+1]

⇒

\;500\;=\ov{ {\C}}+0.70(500)+100

\ov{ {\C}}\;=500-350-100

\ov{ {\C}}\;=50

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