CBSE 2022 Class 12 Economics Delhi Set 1 (Term 2)

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Question : 3 of 21
 
Marks: +1, -0
"In an economy, the autonomous consumption is ₹100 and Marginal Propensity to Consume (MPC) is 0.6. If the equilibrium level of Income is 2,000 , then the autonomous investment is ₹300."
Justify the statement with valid calculation.
Solution:
Given Information:

Autonomous consumption (C)=100
Marginal Propensity to Consume (MPC)=0.6
Equilibrium level of Income( Y ) =₹2000
Autonomous Investment (I)=₹300
At equilibrium level, Y=C+I
Thus,₹2000=₹1300+I
I=₹(2000−1300)
I=₹700
At this level of income, Y should be ₹700 but it is given ₹300 which is not valid.
Working Note:
C=C+bY
=₹100+0.6(2000)
=₹100+1200
=₹1300
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