Q17 of 38 Page 1

If marginal propensity to save is 10% and is constant at all levels of income and autonomous consumption is Rs. 200 crores, construct consumption function of the given hypothetical economy.

MPS = 10% or 0.1

Autonomous consumption is Rs 200 crore.


MPC = 1-MPS


= 1-0.1


= 0.9


C= Auto.Consumption +MPC(Y)


C= 200+0.9Y


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