0

Guest

Courses New

Calculate autonomous consumption expenditure from the following date about an economy which is In equilibrium. National income = Rs. 1,200 Marginal propensity to save = 0.20 Investment expenditure = Rs. 100 (Autonomous Consumption Expenditure = 140)

Calculate autonomous consumption expenditure from the following date about an economy which is In equilibrium.
National income = Rs. 1,200
Marginal propensity to save = 0.20
Investment expenditure = Rs. 100 
(Autonomous Consumption Expenditure = 140)

Grade:

2 Answers

Rituraj Tiwari
askIITians Faculty 1792 Points
3 years ago
If MPS=0.20, then
MPC= 1-MPS= 1-0.20= 0.80
Consumption Function is C = c + 0.80 Y where Y in the income in the economy and c= Autonomous consumption.
At equilibrium level of output,
AS=AD
Y= C+I
=> 1,200 = c + 0.80 (1,200) + 100
=> 1,200 = c+ 960 + 100
=> 1,200 = c+ 1,060
=> c = 1,200- 1,060 = Rs.140

thank you
ankit singh
askIITians Faculty 614 Points
3 years ago

 

If MPS=0.20, then 
MPC= 1-MPS= 1-0.20= 0.80 
Consumption Function is C = c + 0.80 Y where Y in the income in the economy and c= Autonomous consumption. 
At equilibrium level of output,
 AS=AD
Y= C+I 
=> 1,200 = c + 0.80  (1,200)  + 100
=> 1,200 = c+ 960 + 100 
=> 1,200 = c+ 1,060
=> c = 1,200- 1,060 = Rs.140 

Think You Can Provide A Better Answer ?

Other Related Questions on 8 grade maths

View all Questions »

ASK QUESTION

Get your questions answered by the expert for free

Answer and earn gift vouchers

Win Gift vouchers upto Rs 500/-

View courses by askIITians

Design classes One-on-One in your own way with Top IITians/Medical Professionals

Click Here Know More

Complete Self Study Package designed by Industry Leading Experts

Click Here Know More

Live 1-1 coding classes to unleash the Creator in your Child

Click Here Know More

a Complete All-in-One Study package Fully Loaded inside a Tablet!

Click Here Know More