Question

An economy is in equilibrium. Find autonomous consumption expenditure:

National Income =1,600

Investment Expenditure = 300

Marginal Propensity to Consume= 0.8

Answer 1

Given that

Y = Rs 1600

C = 0.8

I  = Rs 300

As we know that

Y=C+I

`1600=barC+cY+I`

`1600=barC+0.8xx1600+300`

`1600=barC+1580`

Therefore, `barC=Rs 20`