# Determination of Income and Employment (CBSE Class-12 Economics): Questions 23 - 30 of 35

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## Question number: 23

» Determination of Income and Employment » Short-Run Equilibrium Output

Short Answer Question▾

### Write in Short

Why is income tax a direct tax?

## Question number: 24

» Determination of Income and Employment » Propensity to Consume and Propensity to Save

Essay Question▾

### Describe in Detail

Given consumption function c = 100 + 0.75Y (Where C = consumption expenditure and Y = national income) and investment expenditure RS. 1000, calculate:

(I) Equilibrium level of national income

(ii) Consumption expenditure at equilibrium level of national income.

### Explanation

(I) All know about Y = C +I

Substitute that value of C

Y = 100 + 0.75Y + 1000

0.25Y = 1100

Y = =4400

Equilibrium level of national income = Rs. 4400

(iii) Consumption expenditure at equilibrium level of national income.

Y = C +I

Substituting Y… (28 more words) …

## Question number: 25

» Determination of Income and Employment » Propensity to Consume and Propensity to Save

Essay Question▾

### Describe in Detail

Complete the following table:

 Income Saving Marginal propensity to consume Average Propensity to save 0 -12 - - 20 -6 - - 40 0 - - 60 6 - -

### Explanation

 Income (Y) Saving (S) Consumption (C) =Y - S Marginal propensity to consume (Equation) Average Propensity to save Equation 0 -12 12 - - 20 -6 26 0.7 -0.3 40 0 40 0.7 0 60 6 54 0.7 0.1

Consumption = Income – Saving

It means in first… (67 more words) …

## Question number: 26

» Determination of Income and Employment » Propensity to Consume and Propensity to Save

Short Answer Question▾

### Write in Short

What is the relationship between marginal propensity to save and multiplier?

## Question number: 27

» Determination of Income and Employment » Propensity to Consume and Propensity to Save

Short Answer Question▾

### Write in Short

Can the value of average propensity to save be negative? If yes, when?

## Question number: 28

» Determination of Income and Employment » Propensity to Consume and Propensity to Save

Essay Question▾

### Describe in Detail

Complete the following table:

 Income Consumption Marginal Propensity to save Average Propensity to Consume 0 12 20 26 - - 40 40 - - 60 54 - -

### Explanation

 Income (Y) Consumption (C) Saving (S) = Y - C Marginal Propensity to save (MPS) Average Propensity to consume (APC) 0 12 -12 - - 20 26 -6 -6/20 =-0.3 26/20 = 1.3 40 40 0 6/20 = 0.3 40/40 = 1.0 60 54 6 6/20 = 0.3 54/60 =… (29 more words) …

## Question number: 29

» Determination of Income and Employment » Propensity to Consume and Propensity to Save

Essay Question▾

### Describe in Detail

Complete the following table:

 Income Marginal Propensity to consume Saving Average propensity to save 0 - -90 - 100 0.6 - - 200 0.6 - - 300 0.6 - -

### Explanation

 Income Marginal Propensity to consume Saving Consumption Average propensity to save 0 - -90 90 - 100 0.6 -50 (100 - 150) 150 (90 + 60) -0.5 200 0.6 -10 (200 - 210) 210 (150 + 60) -0.05 300 0.6 30 (300 - 270) 270 (210 + 60) 0.1

Marginal… (45 more words) …

## Question number: 30

» Determination of Income and Employment » Propensity to Consume and Propensity to Save

Essay Question▾

### Describe in Detail

In an economy an increase in investment leads to increase in national income which is three times more than the increase in investment. Calculate marginal propensity to consume.

### Explanation

Increase in income = 3 times more than the increase in investment.

Here, 3 times more than increase in investment = 3 times of investment + Initial incestment

K = 3

We know that K=

3=

MPC = , MPC = 0.66

So, value of marginal… (24 more words) …

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