Question

Find National Income from the following
Autonomous Consumption = Rs. 100
Marginal Propensity to Consume =0.60
Investment = Rs. 200

Answer 1

Explanation:

If consumption Function is C = 100+ 0.80 Y where Y in the income in the economy.

At equilibrium level of income,

AS=AD

Y= C+I

=> Y= 100 + 0.80 Y + 50

=> Y - 0.80 Y = 100 + 50

Answer 2

Answer:

At equilibrium Y = C +I Y = c‒ +b.Y + I =100+0.6Y + 200 = 300 + 0.6Y → 0.4Y = 300 →Y = Rs 750