Consumption Function and Propensity to Save

In an economy 75 percent of the increase in income is spent on consumption. Investment increased by ₹ 1,000 crore.

Calculate the total increase in income on the basis of given information. 

APC can be greater than one, but MPC is always less than one. Give a reason to justify this phenomenon.

Suppose marginal propensity to consume is 0.8. How much increase in investment is required to increase national income by Rs. 2000 crore? Calculate.

What will be APC when APS = 0?

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

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. Calculate the Investment Expenditure from the following
National Income = 800
Marginal propensity to save = 0.3
Autonomous Consumption = 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