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Given that the autonomous consumption being Rs. 100, marginal propensity to save being 0.25 and investment being Rs. 1,100, the equilibrium level of income is:
  • a)
    Rs. 900
  • b)
    Rs. 4,800
  • c)
    Rs. 4,400
  • d)
    Rs. 2,500
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
Given that the autonomous consumption being Rs. 100, marginal propensi...
(AS)Y = C + I (AD)
(Y = 100 + 0.75Y + 1100 i.e. 0.25Y = 1200 and Y = 4800)
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Community Answer
Given that the autonomous consumption being Rs. 100, marginal propensi...
Calculating Equilibrium Level of Income:

Step 1: Calculating the Total Savings
- Marginal Propensity to Save (MPS) = 0.25
- Autonomous Consumption = Rs. 100
- Total Savings = MPS * Total Income
- Total Savings = 0.25 * Total Income

Step 2: Equating Savings and Investment for Equilibrium
- Total Savings = Investment
- 0.25 * Total Income = Rs. 1,100

Step 3: Finding the Equilibrium Level of Income
- Total Income = Rs. 1,100 / 0.25
- Total Income = Rs. 4,400
Therefore, the equilibrium level of income is Rs. 4,400, which is option 'B'.
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Given that the autonomous consumption being Rs. 100, marginal propensity to save being 0.25 and investment being Rs. 1,100, the equilibrium level of income is:a)Rs. 900b)Rs. 4,800c)Rs. 4,400d)Rs. 2,500Correct answer is option 'B'. Can you explain this answer?
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Given that the autonomous consumption being Rs. 100, marginal propensity to save being 0.25 and investment being Rs. 1,100, the equilibrium level of income is:a)Rs. 900b)Rs. 4,800c)Rs. 4,400d)Rs. 2,500Correct answer is option 'B'. Can you explain this answer? for Humanities/Arts 2024 is part of Humanities/Arts preparation. The Question and answers have been prepared according to the Humanities/Arts exam syllabus. Information about Given that the autonomous consumption being Rs. 100, marginal propensity to save being 0.25 and investment being Rs. 1,100, the equilibrium level of income is:a)Rs. 900b)Rs. 4,800c)Rs. 4,400d)Rs. 2,500Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for Humanities/Arts 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Given that the autonomous consumption being Rs. 100, marginal propensity to save being 0.25 and investment being Rs. 1,100, the equilibrium level of income is:a)Rs. 900b)Rs. 4,800c)Rs. 4,400d)Rs. 2,500Correct answer is option 'B'. Can you explain this answer?.
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