What will be the savings if autonomous c

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Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Determination of Income and Employment

Question:

What will be the savings if autonomous consumption is Rs 100 and MPC = 0.6 at Rs 4000 level of income?

Options:

1500

2400

3500

2300

Correct Answer:

1500

Explanation:

The correct answer is Option 1: 1500

S = - c̅ + (1-b)Y

S = -100 + ( 1 - 0.6) 4000

S = -100 + ( 0.4 ) 4000

S = -100 + 1600

S = 1500