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Question
Find national income from the following:
Autonomous consumption = Rs100
Marginal propensity to consume = 0.80
Investment = Rs 50
Solution
C = Rs 100
MPC (b) =0.80
I= Rs 50
At equilibrium,
Y=C+I
or `Y=barC+bY+I`
By substituting the values, we get
Y=100 + 0.8Y + 50
0.2 Y = 150
Y= Rs 750
National Income =Rs 750
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