Determination of Income and Employment-Propensity to Consume and Propensity to Save (CBSE Class-12 Economics): Questions 20 - 22 of 22

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Question number: 20

» 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= 11MPC

3= 11MPC

3(… (39 more words) …

Question number: 21

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

Essay Question▾

Describe in Detail

Explain ‘saving function’ with the help of a schedule. Also record marginal propensity to save in the schedule.

Explanation

This functional relation between saving and income is called saving function it is represented as s = S +sYd

Here, S means autonomous saving

S represent Marginal propensity to save

Yd represents disposable income.

Income and saving function diagram

This image is of… (90 more words) …

Question number: 22

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

Short Answer Question▾

Write in Short

Rs. 200 crore increase in investment lead to a rise in national income by Rs. 1000 crores. Find out marginal propensity to consume.

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