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Find Equilibrium National Income: Autonomous Consumption Expenditure = 120 Marginal Propensity to Consume = 0.9 Investment Expenditure = 1100 - CBSE (Commerce) Class 12 - Economics

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Question

Find equilibrium national income:

Autonomous consumption expenditure = 120

Marginal propensity to consume = 0.9

Investment expenditure = 1100

Solution

Given that

I = Rs 1100

Marginalpropensity toconsume 0.9

`barC` = Rs 120

Y = ?

As we know that

Y = C + I

Y = `barC+`

Y = 120 + 0.9 x Y + 1100

Y = 0.9 x Y + 1220

Y = 12,200

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Solution Find Equilibrium National Income: Autonomous Consumption Expenditure = 120 Marginal Propensity to Consume = 0.9 Investment Expenditure = 1100 Concept: Consumption Function and Propensity to Save.
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