Question

Calculate consumption expenditure at the income level of Rs.1000 crores, if autonomous consumption is Rs. 80 crores. And 20% of additional income is saved.

Answer 1

MPS = 0.2 SO , MPC =0.8 

C=c + bY (c = autonomous consumption) 

C= 80+ 0.8 * 1000=Rs. 880 crores