Estimate the value of Aggregate Demand in an economy if:
`{:(,"(a)","Autonomous Investment (I)",,=100"crores"),(,"(b)","Marginal Propensity to Save",,=0.2),(,"(c)","Level of Income (Y)",,=4","000"crores"),(,"(d)","Autonomous Consumption Expenditure"(barc),,=50"crores"):}`

Explanation

Aggregate Demand (AD) function is given as: AD = C + 1
or, AD = {`barc` + b(Y)}+I `" "`(as C= `barc`+ b(Y))
`barc` = 50 (Given)
b or MPC = 1-MPS = 1-0.2 = 0.8
Substituting the values of `barc` and b in AD function, we get:
AD = {50 + 0.8(4,000)} + 100= ₹ 3,350 crores
Aggregate Demand = ₹ 3,350 crores