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In an Economy, total savings are Rs. 2000 crores and the ratio of average propensity to save and average propensity to consume is 2 : 7. Calculate the level of income in the economy? |
2000 crores. 7000 crores. 9000 crores. 14,000 crores. |
9000 crores. |
The correct answer is Option (3) → 9000 crores. We are given:
We know: APS + APC=1
Let APS = 2x and APC = 7x, then: 2x + 7x = 1
⇒x= 1/ 9
So:
We Know APS= S /Y
2/9 =2000/Y
Y = (2000*9) / 2
Y =9,000
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