In an economy, the consumption expenditure

CBSE Class 12 CBSE Class 12 Economics
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1

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.

2

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