The value of marginal propensity to consume is $0.6$ and initial income in the economy is Rs. $100$ crores. Prepare a schedule showing Income, Consumption and Saving. Also show the equilibrium level of income by assuming autonomous investment of Rs. $80$ crores.

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Solution

Income = Rs.100 crore
MPC = 0.6
Consumption = Income $\times$ MPC = 100 cr $\times$ 0.6 = 60 crore
Savings = Income - Saving = 100 crore - 60 crore = 40 crore
Equilibrium level of income (Y) = C+I = 60 cr + 80 cr = 140 cr

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The value of marginal propensity to consume is 0.6 and initial income in the economy is Rs. 100 crores. Prepare a schedule showing Income, Consumption and Saving. Also show the equilibrium level of income by assuming autonomous investment of Rs. 80 crores.

Income = Rs.100 croreMPC = 0.6Consumption = Income × MPC = 100 cr × 0.6 = 60 croreSavings = Income - Saving = 100 crore - 60 crore = 40 croreEquilibrium level of income (Y) = C+I = 60 cr + 80 cr = 140 cr

The value of marginal propensity to consume is $0.6$ and initial income in the economy is Rs. $100$ crores. Prepare a schedule showing Income, Consumption and Saving. Also show the equilibrium level of income by assuming autonomous investment of Rs. $80$ crores.

Income = Rs.100 crore
MPC = 0.6
Consumption = Income $\times$ MPC = 100 cr $\times$ 0.6 = 60 crore
Savings = Income - Saving = 100 crore - 60 crore = 40 crore
Equilibrium level of income (Y) = C+I = 60 cr + 80 cr = 140 cr