Calculate Autonomous Consumption Expenditure from the following data a

1.	Calculate Autonomous Consumption Expenditure from the following data about an economy which is in equilibrium :National income = 500 Marginal propensity to save = 0.30 Investment expenditure = 100
Answer» Since MPC + MPS = 1 MPC = 1 – MPS MPC = 1 – 0.30 = 0.70 A-40 National Income (Y) = Consumption (C) + Investment (I) Consumption (C) = Y -1 = 500 – 100 = 400 Consumption (C) = Autonomous Consumption + (National Income x MPC) Autonomous consumption = C – (Y x MPC) = 400 – (500 x 0.70) = 400 – 350 = 50

Calculate Autonomous Consumption Expenditure from the following data about an economy which is in equilibrium :National income = 500 Marginal propensity to save = 0.30 Investment expenditure = 100

Answer»

Since MPC + MPS = 1

MPC = 1 – MPS MPC = 1 – 0.30 = 0.70

A-40

National Income (Y) = Consumption (C) + Investment (I) Consumption (C) = Y -1

= 500 – 100 = 400

Consumption (C) = Autonomous Consumption + (National Income x MPC) Autonomous consumption = C – (Y x MPC)

= 400 – (500 x 0.70)

= 400 – 350 = 50

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Calculate Autonomous Consumption Expenditure from the following data about an economy which is in equilibrium :National income = 500 Marginal propensity to save = 0.30 Investment expenditure = 100

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