Question

(a) Distinguish between Autonomous Consumption and Induced Consumption.

(b) From the following data about an economy, Calculate its equilibrium level of income :

(i) Autonomous Consumption = 400

(ii) Marginal Propensity to Consume = 0.5

(iii) Investment = 4,000

Answer 1

(a) For part (a) see Q. No.4 of this section.