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