Determination of Income and Employment-Propensity to Consume and Propensity to Save (CBSE (Central Board of Secondary Education- Board Exam) Class-12 Economics): Questions 1 - 6 of 22

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Question number: 1

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

Essay Question▾

Describe in Detail

Draw a straight line consumption curve. From it derive a savings curve explaining the process. Show on this diagram:

(a) the level of income at which Average Propensity to Consume is equal to one.

(b) a level of income at which Average Propensity to Save is negative

Explanation

AC is the consumption curve and OA is the consumption expenditure at zero

level of income.

Income minus consumption is savings. When income

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Question number: 2

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

One Liner Question▾

Write in Brief

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

Question number: 3

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

One Liner Question▾

Write in Brief

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

Question number: 4

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

Write in Short

Complete the following table:

 Income Saving MPC APC 0 -20 - - 50 -10 - - 100 0 - - 150 30 - - 200 60 - -

Question number: 5

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

Appeared in Year: 2005

Essay Question▾

Describe in Detail

 Level of income ( Rs. ) Consumption expenditure Marginal Propensity to consume Marginal Propensity to save 400 240 - - 500 320 - - 600 395 - - 700 465 - -

Explanation

 Level of income ( Rs. ) (Y) Consumption expenditure (C) Marginal Propensity to consume Marginal Propensity to save 400 240 0.60 0.40 500 320 0.80 0.20

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Question number: 6

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

Appeared in Year: 2011

Essay Question▾

Describe in Detail

Explain the relationship between investment multiplier and marginal propensity to consume.

Explanation

Investment multiplier involve that any change in investment can cause change in income and output.

Investment multiplier K =

Investment Multiplier shares direct positive relationship with marginal propensity to consume.

The relationship is expressed as follows.

K=

Assume that value of MPC is 0.6 then

K= = 2.5

If val

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