# Solution - Consumption Function and Propensity to Save

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#### Question

In an economy investment is increased by Rs. 300 crore. If marginal propensity to consume is 2/3, calculate increase in national income.

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#### Similar questions VIEW ALL

An economy is in equilibrium. Find investment expenditure:

National Income =1,000

Autonomous Consumption =100

Marginal propensity to consume =0.8

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Distinguish between marginal propensity to consume and average propensity to consume. Give a numerical example.

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An economy is in equilibrium. Find autonomous consumption expenditure:

National Income =1,600

Investment Expenditure = 300

Marginal Propensity to Consume= 0.8

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Find equilibrium national income:

Autonomous consumption expenditure = 120

Marginal propensity to consume = 0.9

Investment expenditure = 1100

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Suppose marginal propensity to consume is 0.8. How much increase in investment is required to increase national income by Rs. 2000 crore? Calculate.

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Solution for concept: Consumption Function and Propensity to Save. For the courses 12th CBSE (Arts), 12th CBSE (Commerce), 12th CBSE (Science)
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