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Which of the following points are related to The sum of MPC and MPS is always equal to autonomous investments? -

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Question

Which of the following points are related to The sum of MPC and MPS is always equal to autonomous investments? 

Options

  • An investment that is not influenced by expected profitability or level of income is called autonomous investment.

  • In fact, it is an investment expenditure incurred by the government with a view to promoting the level of aggregate demand in the economy when AD falls short of AS, resulting in fall in prices and rise in unemployment

  • An investment that is not influenced by expected profitability or level of income is called autonomous investment and In fact, it is an investment expenditure incurred by the government with a view to promoting the level of aggregate demand in the economy when AD falls short of AS, resulting in fall in prices and rise in unemployment.

  • None of the above

MCQ

Solution

An investment that is not influenced by expected profitability or level of income is called autonomous investment and In fact, it is an investment expenditure incurred by the government with a view to promoting the level of aggregate demand in the economy when AD falls short of AS, resulting in fall in prices and rise in unemployment. 

Explanation:

Autonomous investment is an investment that is not impacted by predicted profitability or income level. In reality, it is a government investment expenditure for the purpose of promoting. the level of aggregate demand in an economy when AD falls short of AS, resulting in price decreases and increased unemployment. The government plans to raise the level of AD through its own investment. The degree of income has no bearing on autonomous investment. Profit and income are also inelastic. 

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