If MPS=10% and is constant at all levels of income, and the autonomous consumption is ₹200 crore, construct consumption function of the given hypothetical economy.
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MPS=10% and is constant at all levels of income, and the autonomous consumption is ₹200 crore, construct consumption function of the given hypothetical economy
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Explanation:
MPS= 10% or 0.1
Autonomous consumption is Rs. 200 crores
C = Autonomous consumption +MPC(Y)
MPC=1-MPS
MPC=1-0.1=0.9
C = 200+ 0.9Y
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