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Items Excluded in GDP

The consumpti...

Question

The consumption function of an economy is given as: C = 40 + 0.7 Y. Calculate the saving at the income level of Rs. 2,200 crores (Saving - 7620 acres)

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Solution

The consumption at income level of Rs. 2,200 crores ,
C = 40+ 0.7 * 2,200
= 40+ 1640= Rs. 1680 crores.
Savings= Income- consumption= 2,200- 1680= Rs. 520 crores.

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