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Income Determination & the Multiplier · Question 25 of 58

Question 25

HardOriginal question

In an economy, equilibrium income is ₹1,000 crore, autonomous consumption is ₹100 crore and the MPC is 0.8. Planned investment is

Options for question 25

Show the answer and explanation
CorrectNot quiteAnswer B

Correct answer: B

Explanation

  1. At equilibrium, Y = C + I, and C = 100 + 0.8 × 1,000 = 900.

  2. I = 1,000 − 900 = ₹100 crore.

Worth noting

₹200 crore is saving plus autonomous consumption; saving alone is 1,000 − 900 = 100.

Concept
Working back to investment
Typical time
100 s
Your time
—
The rule this testsFinding equilibrium income
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Ten questions from Income Determination & the Multiplier, at your own pace.

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