Question

Given the following information, identify whether the economy is in equilibrium or not.

S. No.	Particulars	Amount
(i)	Autonomous Consumption  & Investment Expenditure `(bar A)`	₹ 200 crores
(ii)	Marginal Propensity to Consume (MPC)	0.70
(iii)	National Income	₹ 1,000 crores

Answer 1

A = ₹ 200 crores

MPC = 0.7

National Income (Y) = ₹ 1,000 crores

For an economy to be in equilibrium

Y = A + MPC (Y)

= 200 + 0.7 × 1000

= 200 + 700

= ₹ 900 crores

∴ The economy is not in equilibrium.