Advertisements
Advertisements
Question
In an economy investment is increased by Rs. 300 crore. If marginal propensity to consume is 2/3, calculate increase in national income.
Solution
Given that
MPC = 2/3 = 0.67
Change in investment (ΔI) = Rs 300crore
We know that
k(multiplier) = 1/(1-MPC) = 1/(1-0.67) = 3.03
k = ΔY/ΔI
3.03 = ΔY/300
ΔY = Rs 909crore
APPEARS IN
RELATED QUESTIONS
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
An economy is in equilibrium. Calculate national income from the following :
Autonomous consumption = 100
Marginal propensity to save = 0.2
Investment expenditure = 200
An economy is in equilibrium. Find Marginal Propensity to Consume from the following:
National income = 2000
Autonomous consumption = 400
Investment expenditure = 200
An economy is in equilibrium. Calculate the National Income from the following :
Autonomous Consumption = 120
Marginal Propensity to Save = 0.2
Investment Expenditure = 150
Choose the correct answer :
The income which is not spent on consumption is known as _________.
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?
The relation between APC and MPC in Keynes Psychological consumption function is ______.
MPC = MPS = ?
The relation between consumption and savings are ______
______ buy goods and services for consumption and also supply factors of production.
Marginal Propensity to Save is equal to ______
Calculate Autonomous Consumption expenditure from the following data about an economy which is in equilibrium:
National Income = Rs 1,200
Marginal Propensity to Save = 0.20
Investment expenditure = Rs 100
Which of the following points are related with marginal propensity to consume?
The sum of MPC and MPS is always equal to _____
Average Propensity to Consume is equal to:
Which of the following statements is not correct?
If in an economy, the value of investment multiplier is 4 and Autonomous Consumption is ₹ 30 Crore, the relevant consumption function would be :
Assertion (A): At the break-even level of income, the value of Average Propensity to Consume (APC) is zero.
Reason (R): Sum of Average Propensity to Consume (APC) and Average Propensity to Save (APS) is always equal to one.
What is meant by autonomous consumption expenditure? Show it on a diagram.
