Question

sum of autenenous consumption & autonomous
&
investment is 560. National Income is 2240 crore
Find out MPC.

Answer 1

Answer:

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

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