Advertisements
Advertisements
Question
Calculate Autonomous Consumption Expenditure from the following data about an economy which is in equilibrium:
National income = 500
Marginal propensity to save = 0.30
Investment expenditure = 100
Advertisements
Solution
Given that
I = 100
Y = 500
MPS = 0.30
MPC = 1 - MPC = 1 - 0.30 = 0.70
As we know
Y = C + I
`500 = barC + cY + I`
`500 = barC + 0.7 xx 500 + 100`
C = 500
Therfore `barC = 50`
APPEARS IN
RELATED QUESTIONS
Is the following revenue expenditure or capital expenditure in the context of government budget? Give reason.
Expenditure on a collection of taxes.
Explain how taxes and government expenditure can be used to influence revenue expenditure and capital expenditure?
What is capital expenditure?
Which one of these is a revenue expenditure?
Calculate investment expenditure from the following date about an economy which is in equilibrium :
National Income = 1000
Marginal propensity to save = 0.20
Autonomous consumption expenditure = 100
Giving reason, state whether the following is a revenue expenditure or a capital expenditure in a government budget:
Expenditure on scholarships
The government has started spending more on providing free services like education and health to the poor. Explain the economic value it reflects.
Answer the following question.
How are capital expenditure different from Revenue expenditure? Discuss briefly.
The Government of India has decided to vaccinate the adult population of India (with Covaxin/Covishield), without any charge. This would be categorized as ____________.
| S. No. | Content | Rs (in crores) |
| 1. | Revenue Expenditure | 100 |
| 2. | Capital Receipts | 40 |
| 3. | Net Borrowings | 38 |
| 4. | Net Interest Payments | 27 |
| 5. | Tax Revenue | 50 |
| 6. | Non-tax Revenue | 15 |
What is the revenue deficit?
Level of planned output coincides with planned expenditure when ______
Purchase of shares is related to ______
Calculate Investment expenditure from the following data about an economy that is in equilibrium.
National Income = Rs 1,000
Marginal Propensity to Save = 0.20
Autonomous consumption expenditure = Rs 100
Measure the level of ex-ante aggregate demand when autonomous investment and consumption expenditure (1) is Rs 50 crores, MPS is 0.2 and the level of income (Y) is Rs 4000 crores.
Subsidies and expenditure on scholarships are examples of ______
Which one of the following is not a capital expenditure?
Identify the correctly matched pair of the items in Column A to those in Column B:
| Column A | Column B |
| 1. Revenue Expenditure | (a) Does not cause any reduction in government liability |
| 2. Capital Expenditure | (b) Which creates corresponding liability for the government |
| 3. Revenue Receipts | (c) Which causes a reduction in assets of the government |
| 4. capital Receipts | (d) Causes reduction in government liability. |
