question_answer

Find Consumption Expenditure from the following:

National Income = Rs. 5,000

Autonomous Consumption = Rs. 1,000

Marginal propensity to consume = 0.80

Answer:

National Income, Y= Rs. 5,000

Autonomous consumption (a) = Rs. 1,000

Marginal propensity to consume (b) = 0.80

\[\therefore \]Consumption, (C) \[=a+bY=1,000+0.8(5,000)=1,000+4,000=\mathbf{Rs}.\text{ }\mathbf{5},\mathbf{000}\]