CBSE 2015 Class 12 Economics Outside Delhi Set-2

Question : 2 of 3

Marks: +1, -0

An economy is in equilibrium. Calculate the Marginal Propensity to Save from the following:
National income

=1,000

Autonomous consumption

=100

Investment

=120

Solution:

Given :
National Income

(Y)=1000

Autonomous Consumption (a)

=100

Investment

(I)=120

Y\;=C+1

C\;=a+b Y

Y\;=100+b × 1000+120

1000-120\;=100+b

880\;=100+1000 b

880-100\;=1000 b

780\;=1000 b

b\;=\;{780}/{1000}=0.78

∴ \;\; \;\text " MPC "\;\;=0.78

\;\text " MPS "\;\;=1-\;\text " MPC "\;

\;=1-0.78

\;=0.22

Go to Question:

Prev Question

Next Question