Question

Calculate the value of autonomous spending.

Answer 1

Autonomous spending refers to the components of an economy's aggregate expenditure that the same economy's real level of income does not affect. It is calculated as follows:

C= a + bYd. where 'C' is autonomous spending, 'a' is the level of autonomous consumption, 'b' is marginal propensity to consume out of income, and 'Yd' is the consumption function.