If an economy , Saving Function is given by S `=(-)50+0.2Y and Y = Rs. 2,000`crores, consumption expenditure for the economy would be Rs. 1,650 crores and the autonomous investment is Rs. 50 crores and the marginal propensity to consume is 0.8 True or False ? Justify your answer with proper calculattions.

If an economy , Saving Function is given by S `=(-)50+0.2Y and Y = Rs.

1.	If an economy , Saving Function is given by S `=(-)50+0.2Y and Y = Rs. 2,000`crores, consumption expenditure for the economy would be Rs. 1,650 crores and the autonomous investment is Rs. 50 crores and the marginal propensity to consume is 0.8 True or False ? Justify your answer with proper calculattions.
Answer» Yes all the given values are correct `S=-50+0.2Y` `S=-50+.02(2,000) ` `=-50+400` ` =350` crore At equilibrium level of income : `Y=C+S` `2,000=C+350` ` C=2,000 - 350` `= 1,650 ` crores MPC+MPS=1 MPC+0.2=1 MPC=1-0.2 `=0.8`