The autonomous consumption is an economy is ₹ 500 crore and total personal disposable income is ₹ 5000 crore. If the marginal propensity to consume (mpc) is 0.8, find out the level of aggregate consumption.

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Latest Answer: 1 month ago
In: Commerce

The autonomous consumption is an economy is ₹ 500 crore and total personal disposable income is ₹ 5000 crore. If the marginal propensity to consume (mpc) is 0.8, find out the level of aggregate consumption.

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1 Answers

Answered By Nikita Chetry
Answer: 1 month ago

To calculate aggregate consumption, we use the formula: C=C0+(MPC×Y)C = C_0 + (MPC \times Y)C=C0+(MPC×Y) Where: C0=₹500C_0 = ₹500C0=₹500 crore (Autonomous consumption) MPC=0.8MPC = 0.8MPC=...

To calculate aggregate consumption, we use the formula:

$C = C_0 + (MPC \times Y)$

Where:

$C_0 = ₹500$ crore (Autonomous consumption)
$MPC = 0.8$
$Y = ₹5000$ crore (Disposable income)

Now,

$C = 500 + (0.8 \times 5000) = 500 + 4000 = ₹4500 \text{ crore}$

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The autonomous consumption is an economy is ₹ 500 crore and total personal disposable income is ₹ 5000 crore. If the marginal propensity to consume (mpc) is 0.8, find out the level of aggregate consumption.

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The autonomous consumption is an economy is ₹ 500 crore and total personal disposable income is ₹ 5000 crore. If the marginal propensity to consume (mpc) is 0.8, find out the level of aggregate consumption.

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