Advertisements
Advertisements
Question
An economy is in equilibrium. Find marginal propensity to consume :
Autonomous consumption
Expenditure = 100
Investment expenditure = 100
National Income = 2,000
Solution
Given that
Y= Rs 2000
`barC = Rs 100`
I= 100
As we know that
Y=C+I
`2000=barC+cY+I`
2000 = 100+c x 2000 + 100
2000 = 200 + c x 2000
Marginal propensity to consume(c) = 0.9
APPEARS IN
RELATED QUESTIONS
In an economy investment is increased by Rs. 300 crore. If marginal propensity to consume is 2/3, calculate increase in national income.
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.
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 Rs. 800 crore and marginal propensity to consume is 0.8, explain the working of multiplier
Define marginal propensity to save.
An economy is in equilibrium. Calculate Autonomous Consumption from the following :
National Income = 1,250
Marginal Propensity to Save = 0.2
Investment Expenditure = 150
Write explanatory answer
State and explain J.M. Keynes's ‘psychological law of consumption’.
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 __________.
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?
Which one is correct?
Which of the following is correct?
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 ______
Which of the following points are related to The sum of MPC and MPS is always equal to autonomous investments?
The rate of increase in ______ due to a unit increment in income is called marginal propensity to consume.
The simplest consumption function assumes ______
If the value of Average Propensity to Save (APS) is 0.2 and National Income is ₹4,000 crores, then consumption 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.
If increase in National Income is equal to increase in Savings, the value of Marginal Propensity to Consume would be ______.
