How to Calculate National Income from MPC?

We know that

If We calculate National Income by Expenditure format

National income = Consumption Expenditure + Investment Expenditure

National income = C + I

Now, we can calculate C by using Consumption function formula

it is represented by

C =Ĉ +b(Y)

where

C= Total Consumption

Ĉ = Autonomous Consumption

Y=Income

b=MPC

Now, we can calculate National income as follows

National income=C+I

National income=Ĉ +b(Y) +I

Example 31

Find national income from the following:

Autonomous Consumption = Rs 100

Marginal propensity to consume = 0.8

Investment = Rs 50

NCERT Questions

No questions in this part

Other Books

Question 1

An economy is in equilibrium.

Calculate National Income from the following:

Ĉ = Autonomous Consumption = 100

MPS = 0.2

Investment = 200