The value of marginal propensity to consume is 0.6 and initial income in the economy is 100 crore. Prepare a schedule showing income , consumption and saving.Also show the equilibrium level of income by assuming autonomous investment of 80 crore
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Given:
Marginal propensity to consume (MPC) = 0.6
Initial income = 100
Autonomous investment = 80
Thus, with above given information,
Consumption is the action of using or wasting the money in various resources.
Aggregate supply = Aggregate demand
Where,
Aggregate supply = AS, Aggregate demand = AD.
AD = C+1 Whereas, AS = C+S
Therefore, the level of equilibrium income by assuming autonomous investment of Rs. 80 crores is Rs. 200 crores.
Schedule of Income, Consumption, Savings and Investment are given below.
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