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An Economy is in Equilibrium. from the Following Data About an Economy, Calculate Investment Expenditure: 1) Income = 10000 2) Marginal Propensity to Consume = 0.9 3) Autonomous Consumption = 100 - CBSE (Arts) Class 12 - Economics

ConceptConsumption Function and Propensity to Save

Question

An economy is in equilibrium. From the following data about an economy, calculate investment expenditure:

1) Income = 10000

2) Marginal propensity to consume = 0.9

3) Autonomous consumption = 100

Solution

Given that

Income(Y) = 10,000

MPC (c) = 0.9

Autonomous Consumption (barC) = 100

Aswe know that

Y = C + l

C = C + cY

By substituting the values,we get

C = 100 + 0.9

C = 9100

Y = C + l

l = 10,000 - 9,100

l = 900

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Solution An Economy is in Equilibrium. from the Following Data About an Economy, Calculate Investment Expenditure: 1) Income = 10000 2) Marginal Propensity to Consume = 0.9 3) Autonomous Consumption = 100 Concept: Consumption Function and Propensity to Save.
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