question_answer

Find National Income from the following:

Autonomous Consumption = Rs. 100

Marginal propensity to consume = 0.60

Investment = Rs. 200

Answer:

Given: Autonomous Consumption (a) = 100

MPC (b) = 0.60

Investment (I) = 200

\[\therefore \] Income (Y)\[=a+bY+I\]

\[=100+0.6Y+200\]

\[\Rightarrow \]   \[(Y-0.6)=100+200=300\]

\[\Rightarrow \]   \[Y\text{ }\left( 0.4 \right)\text{ }=\text{ }300\]

\[\Rightarrow \]   \[Y=300\times \frac{10}{4}\]

\[\therefore \]      \[Y=Rs.\text{ }750\]

Therefore National Income is Rs 750.