If MPC = 0.75, autonomous consumption = 100 crore, then find the level of consumption at income level = 8,000 crore : Option 1: 7,000 crores Option 2: 6,100 crores Option 3: 6,900 crores Option 4: 7,100 crores

Answer: 6,100 crores. Solution: Consumption function: C = C + MPC x Y. C = 100 + 0.75 x 8000 = 100 + 6000 = 6100 crore.

Macro

Income & Employment

Easy

If MPC = 0.75, autonomous consumption = 100 crore, then find the level of consumption at income level = 8,000 crore :

7,000 crores

6,100 crores

6,900 crores

7,100 crores

✅ Correct Option: 2

Consumption function: $C = \bar{C} + MPC \times Y$ .

$C = 100 + 0.75 \times 8000 = 100 + 6000 = 6100$ crore.

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