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Question : The equilibrium level of income in an economy is Rs. 3000 crore. The autonomous consumption expenditure is equal to Rs.250 crore and investment expenditure is Rs.1000 crore. Calculate marginal propensity to save.

Option 1: 0.42

Option 2: 0.58

Option 3: 0.32

Option 4: 0.65


Team Careers360 3rd Jan, 2024
Answer (1)
Team Careers360 18th Jan, 2024

Correct Answer: 0.42


Solution : C=\bar c +bY \\ \\ 2000=250+b(3000) \\ \\ b=0.58 \\ \\ MPS=1-b= 1-0.58= 0.42 \\ \\ Hence, Option\, A\, is\, correct.

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