Question

Q6) From the following data about an economy , calculate investment

expenditure and consumption expenditure :

Equilibrium level of national income = Rs 5000

Autonomous expenditure = Rs 500

MPC = 0.4

(class 12
3 makes )​

Answer 1

Answer:

2500

Explanation:

Consumption Function, C = 500+ 0.4 Y where Y in the income in the economy.  

At equilibrium,

AS=AD

Y= C+I  

=> 5,000 = 500 + 0.4 (5,000) + I  

=> 5,000 = 500 + 2,000+ I

=> 5,000 = 2,500 + I

=> I = 5,000- 2,500 =  2,500.

(ii) Consumption Function, C = 500 + 0.4 Y where Y in the income in the economy.  

So at national income 5,000 , consumption expenditure is  

C = 500+ 0.4 ( 5,000)  

   = 500 + 2,000

   = 2,500

i hope this was helpful......