Read the passage carefully and answer the questions based on the passage:

Aggregate Demand and Its Components

Consumption may denote not what people have actually consumed in a given year, but what they had planned to consume during the same period. Similarly, investment can mean the amount a producer plans to add to her inventory. It may be different from what she ends up doing. The planned values of the variables are called their ex ante measures. The most important determinant of consumption demand is household income. A consumption function describes the relation between consumption and income. The simplest consumption function assumes that consumption changes at a constant rate as income changes. Of course, even if income is zero, some consumption still takes place. Since this level of consumption is independent of income, it is called autonomous consumption. The induced component of consumption, cY shows the dependence of consumption on income.

In a given consumption function $C=50+0.5Y$, autonomous consumption is.

50

The correct answer is Option (2) → 50

In the consumption function: C=50+0.5Y

• The number 50 is the autonomous consumption, which is the amount of consumption that occurs even when income (Y) is zero.

• The term 0.5Y is the induced consumption, which changes with income.