In an economy, the consumption expenditure is. Rs. 8750 crore and the ratio of Average Propensity to Consume and Average Propensity to Save is 7:1. Calculate the level of income in the economy.
As, APC
In an economy, the consumption expenditure is. Rs. 8750 crore and the ratio of Average Propensity to Consume and Average Propensity to Save is 7:1. Calculate the level of income in the economy.
As, APC / APS = 7/1 So, ratio of consumption to income, i.e. APC = 7/8. Hence,
APC = C / Y, C = APC X Y = 7/8 X Y [APC = 7/7+1](Where,Y = Income)
So, Y = 8/7 x 8750 = Rs. 10000 crore