Question

The consumption function of an economy is: C = 40 +0-8Y (amount in crores). Determine that level
of income where average propensity to consume will be one.

Answer 1

Answer:

follow me

make as brainliest ans

likes my All ans

ok

Explanation:

Multiplier(k) => Change in income / change ininvestment = 1/ (1- MPC)

=> change in income/ 500 = 1/0.2

=> change in income/ 500 = 5

=> change in income = 5 * 500 = 2500 crores.

Increase in income = MPC (^Y)

= 0.8 * 2500 = 2,000 crores