On the basis of following information, identify whether the economy is in equilibrium or not: S. No. Particulars Amount (i) Autonomous Consumption and Investment Expenditure (\stackrel{-}{A}) ₹ 500 crores (Ii) Marginal Propensity to Save (MPS) 0.2 (iii) National Income ₹ 4,000 crores

CBSE 2020 Class 12 Economics Outside Delhi Set 1 - Question 22

Question : 22 of 47

Marks: +1, -0

On the basis of following information, identify whether the economy is in equilibrium or not:

S. No.	Particulars	Amount
(i)	Autonomous Consumption and Investment Expenditure $({A}↖{-})$	₹ 500 crores
(Ii)	Marginal Propensity to Save (MPS)	0.2
(iii)	National Income	₹ 4,000 crores

Solution:

\ov{ {\C}}=500

MPS

=0.2

National Income

=4,000

crores

\;\text " Income "\;\;=4,000 \;\text " crores "\;

b\;=\ov{{C}}+b(y)

\;\text " MPC "\;\;=1- {\MPC}

\;=1-0.2

\;=0.8

\;=500+0.8 × 4,000

\;=500+3,200

\;=\₹ 3,700

\;=(\₹ 3,700

crores is not equal to 4,000 crores )
The economy is not in equilibrium.

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