#### Question

Calculate Autonomous Consumption Expenditure from the following data about an economy which is in equilibrium:

National income = 500

Marginal propensity to save = 0.30

Investment expenditure = 100

#### Solution

Given that

I = 100

Y = 500

MPS = 0.30

MPC = 1 - MPC = 1 - 0.30 = 0.70

As we know

Y = C + I

`500 = barC + cY + I`

`500 = barC + 0.7 xx 500 + 100`

C = 500

Therfore `barC = 50`

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Solution Calculate Autonomous Consumption Expenditure from the Following Data About an Economy Which is in Equilibrium: National Income = 500 Marginal Propensity to Save = 0.30 Investment Expenditure = 100 Concept: Classification of Expenditure.