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प्रश्न
What is a ‘consumption function’?
What is meant by the term ‘consumption’?
What is a consumption function (propensity to consume)?
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उत्तर
A propensity to consume, or the consumption function, states the relationship between the aggregate consumption expenditure and aggregate income. This concept was introduced by Lord Keynes under his psychological law of consumption, which states that as income increases, consumption also increases but at a lesser rate than the increase in income.
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संबंधित प्रश्न
State the determinants of aggregate demand.
What is aggregate supply?
Given consumption curve, derive saving curve and state the steps taken in the process of derivation. Use Diagram.
Explain national income equilibrium through aggregate demand and aggregate supply. Use diagram. Also explain the changes that take place in an economy when the economy is not in equilibrium
Explain the concept of 'excess demand' in macroeconomics. Also explain the role of 'open market operation' in correcting it.
Explain the concept of ‘deficient demand’ in macroeconomics.
State components of aggregate demand.
Derive the two alternative conditions of expressing national income equilibrium. Show these equilibrium conditions on a single diagram.
What is meant by inflationary gap?
State three measures to reduce inflationary gap.
Aggregate demand can be increased by ______
Explain the concept of deflationary gap.
Explain the role of Cash Reserve Ratio in removing an inflationary gap
explain the role of Bank Rate in correcting deficient demand?
Explain the determinants of aggregate supply.
Explain the following concepts or give definitions.
Depreciation
How will you derive the autonomous expenditure multiplier when the price of final goods and the rate of interest are given?
Give reason or explain.
Aggregate demand is a positive function of the level of employment and output.
Write Short note on:
Marginal Propensity to Consume
State with reason whether you agree or disagree with the following statement.
Aggregate supply is influenced by the state of technology only.
State with reason whether you agree or disagree with the following statement.
Positive net earnings from foreign transactions add to aggregate demand.
Answer in detail.
Explain the determinants of aggregate demand.
Answer in detail.
Explain the equilibrium between Aggregate Demand and Aggregate Supply.
Explain the concept of deficient demand with the help of aggregate demand and aggregate supply curves. Discuss one physical and one monetary measure to correct it.
Discuss the working of the adjustment mechanism in the following situations:
Aggregate demand is greater than the aggregate supply.
Answer the following question.
Describe the adjustments that may take place in an economy when ex-ante Aggregate Demand is greater than ex-ante Aggregate Supply.
What is meant by the “Effective Demand Principle” in the Keynesian theory of employment? Discuss using a schedule or a diagram.
Choose the correct from given options
When aggregate demand is greater than aggregate supply, inventories
The main component of aggregate demand is ______
In a closed economy, aggregate demand is the sum of ______.
How is it determined by using Saving and Investment approach?
Identify the correctly matched pair from Column A to Column B:
| Column A | Column B |
| (1) Y = AD | (a) Level of output at full employment |
| (2) Forward Multiplier | (b) Withdrawal of investment decreases income |
| (3) Paradox of Thrift | (c) People save less or same as before |
| (4) Multiplier (k) < 1 | (d) 0 < MPC < 1 |
When the value of the currency falls as compared to other currencies, it is ______
A decrease in Cash Reserve Ratio will lead to ______
Which of the following statement is true?
It is seen that the private consumption expenditure, private investment expenditure, and ex-ante savings have reduced the ______ in the economy.
If TR is 1,00,000₹ when ₹20,000 units are sold, then AR is equal to:
The slope of the supply curve is measured by ______.
Aggregate demand can be increased by:
“In an economy Planned spending is more than Planned output”.
Explain its impact on the level of output, income and employment.
If planned savings exceeds planned investments in an economy, explain its likely impact on income, output and employment.
With reference to Simple Keynesian model, give the meaning of ex-ante demand.
If aggregate demand exceeds aggregate supply in a situation of full employment, what will be its impact on the economy?
With the help of a diagram, determine the equilibrium level of output and income by using Aggregate demand and aggregate supply approach.
