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

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

K=1/1MPC=Y/ΔI

I=Y×(1MPC)

=500×(1… (24 more words) …

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= 11MPS = 110.25 = 1.33

K= ΔyΔI ΔI=YK = 1251.33 =480

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

Calculation of Marginal Propensity to Save

In this video calculation of marginal… (5 more words) …

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 = 11000.25 =4400

Equilibrium level of national income = Rs. 4400

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

Y = C +I

Substituting… (29 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 ( ΔCΔY)

Average Propensity to save SY

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… (83 more words) …

Question number: 16

» 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: 17

» 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: 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 =… (59 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… (85 more words) …

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