Saved Bookmarks
| 1. |
Calculate the value of Marginal Propensity to Consume (MPC), if in an economy, autonomous consumption is ₹ 500 crores, ex-ante investments are ₹ 4000crores and equilibrium level of Income of the economy is ₹ 18,000 crores. |
|
Answer» We know that consumption function is: = ̅+ . At equilibrium level of Income in the economy Y = C + I Given, Autonomous Consumption (̅) = ₹ 500 crores and Ex-ante Investments (I) = ₹ 4000 crores 18,000 = 500 + MPC(18,000) + 4,000 MPC(18,000) = 18000 – 4500 MPC = 13,500/18,000 MPC = 0.75 |
|