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Question
An economy is in equilibrium. Find autonomous consumption expenditure:
National Income =1,600
Investment Expenditure = 300
Marginal Propensity to Consume= 0.8
Solution
Given that
Y = Rs 1600
C = 0.8
I = Rs 300
As we know that
Y=C+I
`1600=barC+cY+I`
`1600=barC+0.8xx1600+300`
`1600=barC+1580`
Therefore, `barC=Rs 20`
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