Advertisements
Advertisements
Question
An economy is in equilibrium. Find Marginal Propensity to Consume from the following:
National income = 2000
Autonomous consumption = 400
Investment expenditure = 200
Solution
National income (Y) = 2000
Autonomous consumption expenditure = `bar(C) = 400`
Investment expenditure (I) = 200
We know that at equilibrium
` C = bar(C) + MPC(Y)`
where,
`barC` represents autonomous consumption expenditure
MPC represents marginal propensity to consume
So,
`Y = bar(C) + MPC(Y) + I`
With thegiven values
2000 = 400 + MPC(2000) + 200
2000 = 600 + 2000MPC
MPC = 0.7
Thus,marginal propensity to consume is 0.7
APPEARS IN
RELATED QUESTIONS
............... consumption can not be zero.
(Induced / Autonomous / Government / Private)
An economy is in equilibrium. Find autonomous consumption expenditure:
National Income =1,600
Investment Expenditure = 300
Marginal Propensity to Consume= 0.8
Assuming that increase in investment is Rs1000 crore and marginal propensity to consume is 0.9, explain the working of the multiplier.
An economy is in equilibrium. Calculate Marginal Propensity to Save from the following :
National Income = 1,000
Autonomous Consumption = 100
Investment Expenditure = 200
Answer the following question :
Explain the types of investment expenditure.
Answer in brief.
Explain the relationship between Income and Consumption.
Distinguish between Average propensity to consume and Marginal propensity to consume.
Answer the following question.
What is meant by autonomous consumption? Explain with the help of a diagram.
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.
Answer the following question.
Which of the two, average propensity to consume or average propensity to save, can be negative, and why?
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?
What will be APC when APS = 0?
APC + APS = ?
If MPC is less than one, it follows that ______
Why public goods must be provided by the government?
If the value of Average Propensity to Save (APS) is 0.2 and National Income is ₹4,000 crores, then consumption will be ______
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 consumption, identity the value of Marginal Propensity to Save:
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.
