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Income Determination & the Multiplier · Question 28 of 58

Question 28

HardOriginal question

Equilibrium income is ₹800 crore, the MPC is 0.75 and planned investment is ₹120 crore. Autonomous consumption is

Options for question 28

Show the answer and explanation
CorrectNot quiteAnswer A

Correct answer: A

Explanation

  1. Y = (c̄ + I) ÷ (1 − MPC), so c̄ + 120 = 800 × 0.25 = 200.

  2. c̄ = 200 − 120 = ₹80 crore.

Worth noting

₹200 crore is total autonomous spending (c̄ + I), not consumption alone.

Concept
Working back to autonomous consumption
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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