Question : If MPC is four times MPS and consumption at zero level of income is 50 crore derive the consumption function.
Option 1: C=50+0.2Y
Option 2: C=50+0.8Y
Option 3: C=50-0.2Y
Option 4: C=50-0.8Y

Question

Question : If MPC is four times MPS and consumption at zero level of income is 50 crore derive the consumption function.

Option 1: C=50+0.2Y

Option 2: C=50+0.8Y

Option 3: C=50-0.2Y

Option 4: C=50-0.8Y

Team Careers360 · Accepted Answer

Correct Answer: C=50+0.8Y

Solution : MPC:MPS= 4:1 or

MPC:MPS= 0.8:0.2, since MPC+MPS=1

C=50+0.8Y

Hence, Option B is correct.

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Question : If MPC is four times MPS and consumption at zero level of income is 50 crore derive the consumption function.Option 1: C=50+0.2YOption 2: C=50+0.8YOption 3: C=50-0.2YOption 4: C=50-0.8Y

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Question : If MPC is four times MPS and consumption at zero level of income is 50 crore derive the consumption function.
Option 1: C=50+0.2Y
Option 2: C=50+0.8Y
Option 3: C=50-0.2Y
Option 4: C=50-0.8Y

Question : Which of the following statements are correct?

Consumption function refers to functional relationship between consumption and savings.

It is a psychology concept as it is influenced by the subjective factors like consumers, taste preference,