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12th Class Economics Solved Paper - Economics 2015 Delhi Set-III

  • question_answer
    An economy is in equilibrium. Find Marginal Propensity to Consume from the following:
    National income = 2,000
    Autonomous consumption = 400
    Investment expenditure = 200

    Answer:

                \[C=\overline{C}+cY\]
    Where,
                \[\overline{C}\] Represents autonomous consumption expenditure
                  c represents marginal propensity to consumer
    So,
                \[Y=C+cY+I\]
                Substituting the given values,
                            \[2000=400+c(2000)+200\]
                            \[2000=600+2000\text{ }c\]
    or,         \[c=0.7\]
    Thus, marginal propensity to consume is 0.7.


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