In an Economy, AD = ₹250cr + 0.6Y and at zero level of income consumption is ₹150 crores. The autonomous investment will be:
Answer & explanation
Correct answer: option 1
AD = C + I
or
AD = c̅ + bY + I
According to the question, autonomous consumption (c̅) i.e. consumption at zero level of income - ₹150 crores
AD = ₹250 cr + 0.6Y or AD = c̅ + bY + I
so, by comparing both equations c̅ + I = ₹250 cr
₹150 crores + I = ₹250 cr
I = ₹250 cr - ₹150 crores
I = ₹100 crores
Thus, we can say that the autonomous investment is ₹100 crores