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प्रश्न
Answer the following question.
Which of the two, average propensity to consume or average propensity to save, can be negative, and why?
उत्तर
Average Propensity to Save can be negative. It is negative in the situation when savings are negative or when consumption is greater than income ( When past savings are used for consumption). Average Propensity to Consume can never be negative because is the ratio of consumption and income and consumption can never be negative.
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संबंधित प्रश्न
In an economy an increase in investment by Rs 100 crore led to ‘increase’ in national by Rs 1000 crore. Find marginal propensity to consume.
Assuming that increase in investment is Rs1000 crore and marginal propensity to consume is 0.9, explain the working of the multiplier.
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
Define marginal propensity to save.
An economy is in equilibrium. Find 'autonomous consumption' from the following:
National income = 1000
Marginal propensity to consume = 0.8
Investment expenditure = 100
Complete the following table:
|
Consumption expenditure (Rs) |
Savings (Rs) |
Income (Rs) |
Marginal propensity to Consume |
|
100 |
50 |
150 |
|
|
175 |
75 |
……. |
…… |
|
250 |
100 |
……. |
…… |
|
325 |
125 |
……. |
…… |
Write explanatory answer
State and explain J.M. Keynes's ‘psychological law of consumption’.
Explain the following concepts or give definitions.
Consumption
State whether the following statements are True or False with reasons:
Increase in consumption expenditure is less than increase in income.
Distinguish between Average propensity to consume and Marginal 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 __________.
Which one is correct?
Complete the following schedule -
| Y | C | APC | MPC |
| 100 | 90 | ? | ? |
| 120 | 108 | ? | ? |
Calculate equilibrium level of income for a hypothetical economy, for which it is given that:
- Autonomous Investments = ₹ 500 crores, and
- Consumption function, C = 100 + 0.80Y
MPC = 1 − MPS. It is ______
The sum of MPC and MPS is always equal to _____
In an economy, 75 percent of the increase in income is spent on consumption. Investment is increased by Rs 1,000 crore. Calculate the Total increase in income?
Average Propensity to Consume is equal to:
If the marginal propensity to consume is greater than marginal propensity to save, the value of the multiplier will be:
If increase in National Income is equal to increase in Savings, the value of Marginal Propensity to Consume would be ______.
