# Determination of Income and Employment-Propensity to Consume and Propensity to Save (CBSE Class-12 Economics): Questions 12 - 19 of 22

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## Question number: 12

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

Essay Question▾

### Describe in Detail

An increase in investment leads to total rise in national income by Rs. 500 crores. If Marginal Propensity to Consume is 0.9, what is the increase in investment? Calculate.

### Explanation

= Rs. 500 crores Marginal propensity to consume (MPC) =0.9

So, 500 crores is the increase in investment.

## Question number: 13

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

Essay Question▾

### Describe in Detail

Given marginal propensity to save equal to 0.25 what will be the increase in national income if investment increase by Rs. 125 crores calculate.

### Explanation

K= = = 1.33

K= = =480

So, desired increase in investment = Rs. 93.98 crore.

Calculation of Marginal Propensity to Save

In this video calculation of marginal propensity to save is explained.

## Question number: 14

» 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: 15

» 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: 16

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

### Write in Short

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

## Question number: 17

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

### Write in Short

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

## Question number: 18

» 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: 19

» 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) …

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