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Question
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
Solution
`C = barC + cy`
8,000 = 500 + C x 10,000
7,500 = 10,000C
`C = 7500/10000`
C = 0.75
MPC = 0.75
We Know
MPS = 1 - 0.75
∴ MPS = 0.25
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|
Consumption expenditure (Rs) |
Savings (Rs) |
Income (Rs) |
Marginal propensity to Consume |
|
100 |
50 |
150 |
|
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175 |
75 |
……. |
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……. |
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325 |
125 |
……. |
…… |
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Autonomous Consumption.
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 _________.
Write short note on:
Paradox of value
If the income is ₹ 400 crores and consumption is ₹ 250 crores, what will be the APC?
The relation between APC and MPC in Keynes Psychological consumption function is ______.
Which one is correct?
The value of MPC is ______
Which of the following points establish the relationship between MPS and MPC?
Why public goods must be provided by the government?
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.
