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Question
An economy is in equilibrium. Find marginal propensity to consume :
Autonomous consumption
Expenditure = 100
Investment expenditure = 100
National Income = 2,000
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Solution
Given that
Y= Rs 2000
`barC = Rs 100`
I= 100
As we know that
Y=C+I
`2000=barC+cY+I`
2000 = 100+c x 2000 + 100
2000 = 200 + c x 2000
Marginal propensity to consume(c) = 0.9
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