CBSE 2016 Class 12 Economics Outside Delhi Set-1

Question : 9

Total: 19

An economy is in equilibrium. Calculate Marginal Propensity to consume :
National income =1000
Autonomous consumption expenditure =200
Investment expenditure =100

Solution:

National income =1000
Autonomous consumption expenditure =200
Investment expenditure =100
National Income = Consumption + Investment Expenditure
Y‌=c+cY+I
1000‌=200+c(1000)+100
1000‌=300+c(1000)
1000−300‌=c(1000)
700‌=c(1000)
c‌=‌

700

1000

c‌=0.7
Marginal propensity to consume =0.7 .

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