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The value of marginal propensity to consume is 0.6 and initial income in the economy is 100 crores.prepare a schedule showing income consumption and saving,also show equilibrium level of income by assuming autonomous investment of 80 stores.?
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The value of marginal propensity to consume is 0.6 and initial income ...
When MPC is 0.6 and income is 100 crores then consumption must be 60 lakh ...and savings 40 lakh... u can now draw a schedule from this easily..
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The value of marginal propensity to consume is 0.6 and initial income ...
Introduction:
In this scenario, we are given the value of the marginal propensity to consume (MPC) as 0.6 and the initial income in the economy as 100 crores. We are also given that the autonomous investment is 80 crores. We need to prepare a schedule showing the income, consumption, and saving and determine the equilibrium level of income.

Schedule:
To create the schedule, we will start with the initial income and then calculate the consumption and saving at each level of income.

Step 1: Calculate consumption at each level of income
To calculate consumption, we use the formula:
Consumption = Marginal Propensity to Consume (MPC) * Income

Income (in crores) | Consumption (in crores)
-------------------------------------------
100 | 60
110 | 66
120 | 72
130 | 78
140 | 84
150 | 90

Step 2: Calculate saving at each level of income
To calculate saving, we use the formula:
Saving = Income - Consumption

Income (in crores) | Consumption (in crores) | Saving (in crores)
-----------------------------------------------------------------
100 | 60 | 40
110 | 66 | 44
120 | 72 | 48
130 | 78 | 52
140 | 84 | 56
150 | 90 | 60

Equilibrium Level of Income:
The equilibrium level of income occurs when the aggregate demand (consumption + investment) equals the aggregate supply (income).

In this scenario, the autonomous investment is given as 80 crores. So, to find the equilibrium level of income, we need to find the level of income at which consumption + 80 equals income.

Equilibrium Level of Income = Consumption + Autonomous Investment

Using the schedule, we find that at an income of 150 crores, the consumption is 90 crores. Therefore, the equilibrium level of income is:

Equilibrium Level of Income = 90 + 80 = 170 crores

Explanation:
The marginal propensity to consume (MPC) represents the proportion of additional income that is spent on consumption. In this case, the MPC is 0.6, meaning that for every additional crore of income, 60% (0.6) is spent on consumption.

The schedule shows the relationship between income, consumption, and saving. As income increases, consumption also increases but at a slower rate due to the MPC. Saving is the difference between income and consumption.

The equilibrium level of income is the point at which aggregate demand equals aggregate supply. In this case, the autonomous investment of 80 crores is added to consumption to determine the level of income at which the economy is in equilibrium.

Overall, the schedule and determination of equilibrium level of income help us understand the relationship between consumption, saving, and income in the economy.
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The value of marginal propensity to consume is 0.6 and initial income in the economy is 100 crores.prepare a schedule showing income consumption and saving,also show equilibrium level of income by assuming autonomous investment of 80 stores.?
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