Advertisements
Advertisements
प्रश्न
Answer in brief.
Explain the relationship between Income and Consumption.
उत्तर
The relation between the consumption and the income is depicted by the consumption function, also known as ‘Propensity to Consume’. It depicts how a change in the income causes a change in the consumption pattern of an individual.
C = f(Y)
Where,
C represents consumption expenditure
Y represents aggregate income; and
f represents the functional relationship between the consumption expenditure and the level of the disposable income.
According to this, as the income increases, the consumption expenditure also increases. however, the increase in the consumption expenditure is less than the increase in income.
APPEARS IN
संबंधित प्रश्न
Distinguish between marginal propensity to consume and average propensity to consume. Give a numerical example.
Define marginal propensity to consume
Find equilibrium national income:
Autonomous consumption expenditure = 120
Marginal propensity to consume = 0.9
Investment expenditure = 1100
An economy is in equilibrium. Find investment expenditure:
National Income =1,000
Autonomous Consumption =100
Marginal propensity to consume =0.8
Suppose marginal propensity to consume is 0.8. How much increase in investment is required to increase national income by Rs. 2000 crore? Calculate.
The value of marginal propensity to consume is 0.6 and initial income in the economy is Rs 100 crores. Prepare a schedule showing Income, Consumption and Saving. Also show the equilibrium level of income by assuming autonomous investment of Rs 80 crores.
An economy is in equilibrium. From the following data about an economy calculate autonomous consumption.
1) Income = 500
2) Marginal propensity to save = 0.2
3) Investment expenditure = 800
An economy is in equilibrium. From the following data about an economy, calculate investment expenditure:
1) Income = 10000
2) Marginal propensity to consume = 0.9
3) Autonomous consumption = 100
If the marginal propensity to consume is greater than marginal propensity to save, the value of the multiplier will be (Choose the correct alternative)
(a) greater than 2
(b) less than 2
(c) equal to 2
(d) equal to 5
An economy is in equilibrium. From the following data, calculate the marginal propensity to save:
1) Income = 10,000
2) Autonomous consumption = 500
3) Consumption expenditure = 8,000
An economy is in equilibrium. Find 'autonomous consumption' from the following:
National income = 1000
Marginal propensity to consume = 0.8
Investment expenditure = 100
An economy is in equilibrium. Calculate the National Income from the following :
Autonomous Consumption = 120
Marginal Propensity to Save = 0.2
Investment Expenditure = 150
An economy is in equilibrium. Calculate Autonomous Consumption from the following :
National Income = 1,250
Marginal Propensity to Save = 0.2
Investment Expenditure = 150
Explain the Keynesian psychological law of consumption.
Write explanatory answer
State and explain J.M. Keynes's ‘psychological law of consumption’.
Define or explain the following concept.
Autonomous Consumption.
Distinguish between :
Propensity to consume and Propensity to save.
Match the following Group ‘A’ with Group ‘B’:
| Group ‘A’ | Group ‘B’ | ||
| (a) | Giffen’s goods | (1) | Uses of commodities |
| (b) | Essential commodities | (2) | Keynes |
| (c) | Consumption | (3) | Primary function of bank |
| (d) | Consumption function | (4) | Inferior goods |
| (e) | Accept deposits | (5) | Money lender |
|
|
(6) | Inelastic demand | |
|
|
|
(7) | Luxurious commodities |
|
|
|
(8) | Dr. Marshall |
Choose the correct answer :
When income increases consumption and saving will _________.
Distinguish between Average propensity to consume and Marginal propensity to consume.
Define 'or' explain the following concept.
Propensity to save
Define or explain the following concept
Marginal Cost.
Give reason or explain the following statement
Demand for necessary goods is inelastic.
Answer the following question.
What is meant by a propensity to consume?
Suppose in a hypothetical economy, the income rises from ₹ 5,000 crores to ₹ 6,000 crores. As a result, the consumption expenditure rises from ₹ 4,000 crores to ₹ 4,600 crores. Marginal propensity to consume in such a case would be __________.
The consumption function of an economy is : C = 40 + 0.8 Y (amount in ₹ crores). Determine that level of income where the average propensity to consume will be one.
An economy is in equilibrium. From the following data calculate investment expenditure :
(i) Marginal propensity to consume = 0·9
(ii) Autonomous consumption = 200
(iii) Level of income = 10000
Answer the following question.
In an economy, investment increased by 1,100 and as a result of it income increased by 5,500. Had the marginal propensity to save been 25 percent, what would have been the increase in income?
Calculate the change in final income, if Marginal Propensity to Consume (MPC) is 0.8 and change in initial investment is ₹ 1,000 crores.
What will be APC when APS = 0?
APC + APS = ?
Which one is correct?
The value of MPC is ______
The relation between consumption and savings are ______
A consumer spending on the purchase of goods regardless of the income in possession is an example of _______ consumption.
Complete the following schedule -
| Y | C | APC | MPC |
| 100 | 90 | ? | ? |
| 120 | 108 | ? | ? |
A firm is able to sell any quantity of a good at a given price. The firm's Marginal Revenue will be ______
Which of the following statement is true?
If MPC is less than one, it follows that ______
Why public goods must be provided by the government?
The rate of increase in ______ due to a unit increment in income is called marginal propensity to consume.
If MPS = 0, the value of multiplier will be ______
Which of the following statements is not correct?
If the marginal propensity to consume is greater than marginal propensity to save, the value of the multiplier will be:
Assertion (A): Saving curve makes a negative intercept on the vertical axis at zero level of income.
Reason (R): Saving function refers to the functional relationship between saving and income.
'Consumption function curve of an involuntary unemployed workers start from some positive level on Y-axis even at zero level of Income'. Justify the given statement.
For a hypothetical economy, the government incurs an investment expenditure of ₹ 1,000 crore. If the value of Marginal Propensity to Save (MPS) falls from 0.25 to 0.10. Calculate the value of increase in income due to change in the value of Marginal Propensity to Save (MPS).
Complete the following table:
| INCOME (Y) |
SAVING (S) |
APC |
| 0 | (-) 12 | |
| 20 | 6 |
When National Income rises from ₹ 600 Cr. to ₹ 1000 Cr., the consumption expenditure increases from ₹ 500 Cr. to ₹ 800 Cr. Calculate MPC and hence the value of Investment Multiplier.
