CBSE 2015 Class 12 Economics Delhi Set-1

Question : 14 of 19

Marks: +1, -0

An economy is in equilibrium. Calculate national income from the following.
Autonomous consumption

=100

Marginal propensity to save

=0.2

Investment expenditure

=200

Solution:

Given
Autonomous consumption

(\ov{ {\C}})=100

{\MPS}( {\ s})=0.2

i.e.

{\MPC}(c)=1-{\MPS}=1-0.2=0.8

\;1=200

\;y= ?

We know that at equilibrium,

\; {\Y}\;= {\C}+ {\I}

\;\text " i.e. "\;\; {\Y}\;=(\ov{ {\C}})+ {\cY}+ {\I}

⇒ {\Y}\;=100+0.8 {\Y}+200

⇒ {\Y}\;=0.8 {\Y}+300

⇒ {\Y}-0.8 {\Y}\;=300

⇒\;0.2 {\Y}\;=300

\;\text " so, "\;\; {\Y}\;=1,500

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