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Aggregate Demand, Consumption & Saving · Question 19 of 60

Question 19

MediumOriginal question

The consumption function is C = 100 + 0.7Y. At an income of ₹1,000 crore, the APC is

Options for question 19

Show the answer and explanation
CorrectNot quiteAnswer C

Correct answer: C

Explanation

  1. C = 100 + 0.7 × 1,000 = 800.

  2. APC = 800 ÷ 1,000 = 0.8, higher than the MPC of 0.7 because of autonomous consumption.

Worth noting

0.7 is the MPC.

Concept
APC from the consumption function
Typical time
70 s
Your time
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The rule this testsThe consumption function
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