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Justify the following statement with valid argument : 'At higher levels of income people generally have lower Marginal Propensity to Consume (MPC).'
Calculate equilibrium level of income for a hypothetical economy, for which it is given that : (i) Autonomous Investments (I_0) = Rs. 2,500 crores, and (ii) Consumption Function; C = 1000 + 0.8Y where C = Consumption and Y = Income Calculate, change in Income (ΔY) for a hypothetical economy, for which it is given that : (i) Marginal Propensity to Consume (MPC) = 0.75, and (ii) Change in Investments (ΔI) = Rs. 20,000 crores.
Using a hypothetical example, elaborate the working of investment multiplier in an economy.
Calculate equilibrium level of income for a hypothetical economy for which it is given that : (i) Autonomous Investment (I_O) = Rs. 20,000 crores, and (ii) Consumption function; C = 4000 + 0.8Y Where C = Consumption and Y = Income. Calculate, change of income (ΔY) for a hypothetical economy, for which it is given that : (i) Marginal Propensity to Save (MPS) = 0.25, and (ii) Change in Investments (ΔI) = Rs. 10,000 crores.
Calculate equilibrium level of income for a hypothetical economy for which it is given that : (i) Autonomous Investment (I_0) = Rs. 10,000 crores, and (ii) Consumption Function; C = 2000 + 0.75Y; where C = Consumption and Y = Income. Calculate, Change of Income (ΔY) for a hypothetical economy, for which it is given that : (i) Change in Investment (ΔI) = 5,000 crores. (ii) Marginal Propensity to Consume (MPC) = 0.75.
Justify the following statement : "Full employment is an essential condition to be fulfilled under Keynesian Economics Principles." "Involuntary Unemployment is a situation where an able bodied person unwilling to work does not get work at the prevailing wage rate." Do you agree with the given statement ? Elucidate briefly.
Calculate the Equilibrium level of Income for an imaginary economy, if it is given that : (a) Consumption function, C = 500 + 0.80 Y where C = Consumption, Y = Income (b) Autonomous Investments (I_0) = Rs. 1,000 crore
"In a hypothetical economy, planned savings fall short of planned investments, leading to fall in employment and income." Do you agree with the given statement ? Support your answer with a valid explanation.
Calculate the Equilibrium level of Income for an imaginary economy, if it is given that : (a) Saving function, S = (-)500 + 0.2 Y where S = Savings, Y = Income (b) Autonomous Investments (I_0) = Rs. 1,500 crore
Calculate the Equilibrium level of Income for an imaginary economy, if it is given that : (a) Consumption function, C = 400 + 0.6 Y where C = Consumption, Y = Income (b) Autonomous Investments (I_0) = Rs. 2,000 crore
On the basis of following schedule, answer the given questions : (a) Calculate Marginal Propensity to Save (MPS) at Rs. 150 crores level of income. (b) What is the value of Autonomous Consumption ? In an economy 75 percent of the increase in income is spent on consumption. Investment increased by Rs. 1,000 crore. Calculate the total increase in income on the basis of given information.
You are given the consumption function of an imaginary economy, C = 100 + 0.8 Y, where C = Consumption and Y = Income. Calculate : (i) The value of Marginal Propensity to Save (MPS) (ii) The level of income at Break-Even Point S = – 60 + 0.1 Y is the saving function, where S is Saving and Y is National Income and Investment Expenditure (I) is Rs. 4,000 crore in an economy. Calculate the Equilibrium level of Income.
If planned savings exceed planned investments in an economy, state its likely impact on output and employment. If planned savings fall short of planned investments in an economy, state its likely impact on output and employment.
Discuss briefly the working process of investment multiplier (K), assuming that Change in Investment (ΔI) is Rs. 4,000 crore and Marginal Propensity to Consume (MPC) is 0.5.
(a) “Consumption and saving curves complement each other.” Do you agree with the statement ? Explain with valid reasons. (b) “Taxes help to curb deflationary situation in the economy.” Comment.
"In an economy, the autonomous consumption is Rs. 100 and Marginal Propensity to Consume (MPC) is 0.6. If the equilibrium level of Income is Rs. 2,000, then the autonomous investment is Rs. 300." Justify the statement with valid calculation. An Economy is in equilibrium, calculate the Marginal Propensity to Save (MPS) from the following : (i) National Income (Y) = Rs. 4,400 (ii) Autonomous Consumption (C) = Rs. 1,000 (iii) Investment Expenditure (I) = Rs. 70
'Consumption function curve of an involuntary unemployed workers start from some positive level on Y-axis even at zero level of Income.' Justify the given statement.
'Investment multiplier and Marginal Propensity to Consume are directly related to each other.' Explain with the help of numerical example.
"In an economy, the autonomous consumption is 100 and Marginal Propensity to Consume (MPC) is 0.6. If the equilibrium level of Income is 2,000, then the autonomous investment is 300." Justify the statement with valid calculation. An Economy is in equilibrium, calculate the Marginal Propensity to Save (MPS) from the following : (i) National Income (Y) = 4,400 (ii) Autonomous Consumption (C_bar) = 1,000 (iii) Investment Expenditure (I) = 70
'Investment multiplier and Marginal Propensity to Save are indirectly related to each other.' Explain with the help of numerical example.
At the break-even point level of incomes for the economy is 10,000 crores and if the people tends to save 20 per cent of their additional income, then calculate the value of autonomous consumption. An Economy is in equilibrium, calculate the Marginal Propensity to Save (MPS) from the following : (i) National Income (Y) = 4,400 (ii) Autonomous Consumption (C_bar) = 1,000 (iii) Investment Expenditure (I) = 100
If the value of investment multiplier = 4 and Dissavings = (–) 60, identify the correct Saving function from the following :
For the given Consumption function, C = 205 + 0.9 Y, the value of investment multiplier would be __________. (Choose the correct alternative to fill up the blank)
Read the following statements : Assertion (A) and Reason (R). Choose the correct alternative given below : Assertion (A) : Before reaching the Break-Even level of income, the value of Average Propensity to Consume (APC) is greater than one. Reason (R) : The Average Propensity to Consume (APC) is the ratio of the total consumption and total income. Alternatives :
Identify which of the following equations is true. (Choose the correct alternative)
A situation in which an able bodied person is not willing to work at the existing wage rate, is referred to as ____________ situation. (Choose the correct alternative to fill up the blank)
Describe the adjustment mechanism, if ex-ante savings are less than ex-ante investments.
For the given Consumption function, C = 205 + 0.9 Y, the value of investment multiplier would be ___________. (Choose the correct alternative to fill up the blank)
Read the following statements carefully : Statement 1 : The induced consumption shows, the direct relation between consumption and income. Statement 2 : With a certain increase in income, induced consumption also increases. In the light of the given statements, choose the correct alternative from the following :
Read the following statements – Assertion (A) and Reason (R). Choose one of the correct alternatives given below : Assertion (A) : At the break-even level of income, the value of Average Propensity to Consume (APC) is zero. Reason (R) : Sum of Average Propensity to Consume (APC) and Average Propensity to Save (APS) is always equal to one. Alternatives :
_____ refers to that level of Aggregate Demand, which can be met by the corresponding supply in the economy. (Fill up the blank with correct alternative)
Read the following statements carefully : Statement 1 : Savings function can be derived from Consumption function. Statement 2 : Consumption curve must always start from the point of origin. In light of the given statements, choose the correct alternative from the following :
If in an economy, the value of Investment Multiplier is 5 and dissavings are (-)100 crore, the relevant savings at income level of Rs. 1,400 crore would be Rs. ________ crore. (Choose the correct alternative to fill up the blank)
The range of value of Investment Multiplier is always between _____ and ______. (Choose the correct alternative to fill up the blanks)
Read the following statements : Assertion (A) and Reason (R). Choose the correct alternative from those given below. Assertion (A) : Ex-ante savings and Ex-ante investments are never equal to each other. Reason (R) : At equilibrium level of income, aggregate demand may not be equal to the aggregate supply. Alternatives :
Read the following statements : Assertion (A) and Reason (R). Choose the correct alternative from those given below. Assertion (A) : The value of Average Propensity to Consume (APC) can never be zero or negative. Reason (R) : Average Propensity to Consume (APC) is independent of the level of income. Alternatives :
Suppose the following information is given about a hypothetical economy : C = 100 + 0.75 Y (where, C = Consumption and Y = Income) I_0 = 200 (I_0 = Autonomous Investment) Calculate the following on the basis of the given information : (a) Equilibrium Level of Income (b) Aggregate Demand at Equilibrium Level of Income (c) Marginal Propensity to Save
If in an economy, the value of Investment Multiplier is 5 and dissavings are (-)100 crore, the relevant savings at income level of Rs. 1,400 crore would be Rs. _______ crore. (Choose the correct alternative to fill up the blank)
The range of value of Investment Multiplier is always between _____ and _____. (Choose the correct alternative to fill up the blanks)
Suppose the following information is given about a hypothetical economy : C = 200 + 0.75 Y (where, C = Consumption and Y = Income) I_0 = 300 (I_0 = Autonomous Investment) Calculate the following on the basis of the given information : (a) Equilibrium Level of Income (b) Aggregate Demand at Equilibrium Level of Income (c) Marginal Propensity to Save
Suppose the following information is given about a hypothetical economy : C = 300 + 0.8 Y (where, C = Consumption and Y = Income) I_0 = 200 (I_0 = Autonomous Investment) Calculate the following on the basis of the given information : (a) Equilibrium Level of Income (b) Aggregate Demand at Equilibrium Level of Income (c) Marginal Propensity to Save
Read the following statements carefully : Statement 1 : Investment is defined as addition to the physical capital and changes in the inventory. Statement 2 : At equilibrium level of income, ex-post investments and ex-post savings are always equal. In light of the given statements, choose the correct alternative from the following :
If the Marginal Propensity to Save (MPS) is 0.5, what will be the value of investment multiplier ? (Choose the correct alternative)
An increase in National Income occurs by Rs. 3,000 crore, as investments increased by Rs. 1,200 crore. The value of investment multiplier would be _________. (Choose the correct alternative to fill up the blank)
Read the following statements : Assertion (A) and Reason (R). Choose the correct alternative given below. Assertion (A) : Rich people have lower Marginal Propensity to Consume (MPC) as compared to poor people. Reason (R) : Consumption curve makes an intercept on the y-axis at a point above the origin. Alternatives :
Suppose consumption function for an economy is C = 80 + 0.75 Y (where C = consumption function and Y = national income) and the investment expenditure is Rs. 200 crore. Estimate the following : (a) Equilibrium level of income (b) Values of consumption and saving at equilibrium level of income
An increase in National Income occurs by Rs. 3,000 crore, as investments increased by Rs. 1,200 crore. The value of investment multiplier would be ________. (Choose the correct alternative to fill up the blank)
An economy is in equilibrium. From the following data, calculate the value of Autonomous Consumption. National Income = Rs. 5,000 crore Marginal Propensity to Save (MPS) = 0.2 Investment Expenditure = Rs. 800 crore
"In an economy, an increase in investment leads to doubling of the national income." Calculate the Marginal Propensity to Consume (MPC) for the given economy.
If in an economy, the Investment Multiplier is 4 and Autonomous Consumption is Rs. 30 crore, the relevant consumption function would be ______. (Fill up the blank with correct alternative)
If increase in National Income is equal to increase in Savings, the value of Marginal propensity to Consume would be ______. (Fill up the blank with correct alternative)
Read the following statements – Assertion(A) and Reason (R). Choose one of the correct alternatives given below : Assertion (A) : Full employment refers to, absence of involuntary unemployment. Reason (R) : Under full employment situation, all willing and able bodied people get employment at prevailing wage rate. Alternatives :
In an economy, the value of Marginal Propensity to Save (MPS) is 0.25, what will be the value of increase in income, if investments increased by Rs. 200 crores ?
If planned savings exceeds planned investments in an economy, explain its likely impact on income, output and employment.
Read the following statements – Assertion (A) and Reason (R). Choose one of the correct alternatives given below : Assertion (A) : Full employment refers to, absence of involuntary unemployment. Reason (R) : Under full employment situation, all willing and able bodied people get employment at prevailing wage rate. Alternatives :
If a linear consumption curve takes a parallel shift downwards, the value of investment multiplier will ______
Read the following statements carefully : Statement 1 : If in an economy the level of income increases (ΔY), it will always proportionately increase the level of consumption (ΔC). Statement 2 : Marginal Propensity to Consume (MPC) and Marginal Propensity to Save (MPS) are always equal to each other. In the light of the given statements, choose the correct alternative from the following :
Read the following statements – Assertion (A) and Reason (R). Choose the correct alternative given below : Assertion (A) : Full employment situation refers to absence of involuntary unemployment. Reason (R) : Under full employment situation, all the willing and able bodied people get employment at the prevailing wage rate. Alternatives :
Total consumption expenditure by households under Keynesian Economics is a combination of __________ and __________. Choose the correct alternative to fill in the blanks)
Suppose for a hypothetical economy : C = 100 + 0.75Y (where C = Consumption and Y = Income) I_0 = 400 (I_0 = Autonomous Investment) Value of Investment Multiplier (K) would be ____________. (Choose the correct alternative to fill in the blank)
Complete the following table. Construct/Express the Consumption function at Rs. 200 crore level of income. “In an economy, ex-ante Aggregate Supply is less than ex-ante Aggregate Demand.” Explain its impact on the level of output, income and employment.
Suppose for a hypothetical economy : C = 100 + 0.75Y (where C = Consumption and Y = Income) I_0 = 400 (I_0 = Autonomous Investment) Value of Investment Multiplier (K) would be __________. (Choose the correct alternative to fill in the blank)
Read the following statements carefully : Statement 1 : A consumption function describes the relationship between consumption and savings. Statement 2 : Consumption function consists of two components — autonomous consumption and induced consumption. In the light of the given statements, choose the correct alternative from the following :
Suppose in an imaginary economy, autonomous consumption = Rs. 500 crore and marginal propensity to consume = 0.8. The saving function for the economy would be ___________. (Choose the correct alternative to fill in the blank)
Read the following statements : Assertion (A) and Reason (R). Choose the correct alternative from those given below : Assertion (A) : The maximum value of Marginal Propensity to Save (MPS) can be unity. Reason (R) : At the break-even level of income, savings are zero. Alternatives :
Read the following statements : Assertion (A) and Reason (R). Choose the correct alternative from those given below : Assertion (A) : The equilibrium level of income is determined, when ex-ante spending and ex-ante output are equal. Reason (R) : The equilibrium level of income may or may not be the same as the full employment level of output. Alternatives :
For a hypothetical economy, assume the government increased an infrastructural investment by Rs. 10,000 crore. 80% of additional income is consumed in the economy. Estimate the increase in income and the corresponding increase in consumption expenditure in the economy.
Suppose in an imaginary economy, autonomous consumption = Rs. 500 crore and marginal propensity to consume = 0.8. The saving function for the economy would be __________. (Choose the correct alternative to fill in the blank)
For a hypothetical economy, assume the government increased an infrastructural investment by Rs. 20,000 crore. 80% of additional income is consumed in the economy. Estimate the increase in income and the corresponding increase in consumption expenditure in the economy.
For a hypothetical economy, assume the government increased an infrastructural investment by Rs. 30,000 crore. 80% of additional income is consumed in the economy. Estimate the increase in income and the corresponding increase in consumption expenditure in the economy.
Read the following statements : Assertion (A) and Reason (R). Choose the correct alternative from those given below : Assertion (A) : Voluntarily unemployed people are those able bodied people who are not willing to work at the prevailing wage rate. Reason (R) : There exists zero involuntary unemployment at full employment level of equilibrium. Alternatives :
Read the following statements carefully : Statement 1 : Constant rate of change of consumption (ΔC) with respect to change in income (ΔY), is the reason for the straight line consumption curve. Statement 2 : Marginal rate of change between consumption and income is defined as Average Propensity to Consume (APC). In the light of the given statements, choose the correct alternative from the following :
(a) For a hypothetical economy, the government incurs an additional investment expenditure of Rs. 5,000 crore. Assuming that the Marginal Propensity to Save (MPS) becomes half from its present level of 20%, estimate the change in income due to this fall in Marginal Propensity to Save (MPS). (b) State the meaning of autonomous investment.
Read the following statements : Assertion (A) and Reason (R). Choose the correct alternative from those given below : Assertion (A) : Voluntarily unemployed people are those able bodied people who are not willing to work at the prevailing wage rate. Reason (R) : There exists zero involuntary unemployment at full employment level of equilibrium.
If a straight line consumption function makes a positive intercept at the Y-axis, it implies that the Marginal Propensity to Consume ______ and Average Propensity to Consume ______ as the level of income rises. (Fill up the blanks with correct alternative.)
From the given table, identify that level of income, where Average Propensity to Save (APS) becomes zero : (Choose the correct alternative.) Alternatives :
Read the following statements carefully : Statement 1 : Consumption and Savings are the components of National output of an economy. Statement 2 : Higher level of Income often leads to lower savings. In the light of the given statements, choose the correct alternative from the following :
Suppose, the Indian Government decides to boost public investments with a defence project of Rs. 40,000 crore. Explain the likely impacts of the given situation on the Income, Employment and Output of the economy, assuming all other factors constant.
Suppose an economy is in equilibrium. From the following data, calculate Investment Expenditure in the economy : (i) National Income = Rs. 40,000 crore (ii) Marginal Propensity to Consume (MPC) = 0.8 (iii) Autonomous Consumption (c̄) = Rs. 100 crore "With the objective to correct deflation, Reserve Bank of India may decrease the Bank rate." Discuss the rationale behind the step taken by the Reserve Bank of India (RBI).
Suppose, an economy is in equilibrium. From the following data, calculate Investment Expenditure in the economy : (i) National Income = Rs. 10,000 crore (ii) Marginal Propensity to Save(MPS) = 0.2 (iii) Autonomous Consumption (c̄) = Rs. 200 crore "With the objective to correct deflation, Reserve Bank of India may decrease Repo-rate." Discuss the rationale behind the step taken by the Reserve Bank of India (RBI).
From the given table, identify that level of income, where Average Propensity to Save (APS) becomes Zero. (Choose the correct alternative.)
If a straight line consumption function makes a positive intercept at the Y-axis, it implies that the Marginal Propensity to Consume ________ and Average Propensity to Consume ________ as the level of income rises. (Fill up the blanks with correct alternative.)
Suppose an economy is in equilibrium. From the following data, calculate Investment Expenditure in the economy : (i) National Income = Rs. 20,000 crore (ii) Marginal Propensity to Consume (MPC) = 0.8 (iii) Autonomous Consumption (c̄) = Rs. 100 crore. "With the objective to correct deflation, Reserve Bank of India may decrease Reverse Repo Rate." Discuss the rationale behind the step taken by the Reserve Bank of India (RBI).
Read the following statements carefully : Statement 1 : Ex-post savings and Ex-post investments are equal at all levels of income. Statement 2 : Under the effective demand principle, the equilibrium output is equal to ex-ante Aggregate Demand (AD). In the light of the given statements, choose the correct alternative from the following :
In a hypothetical economy, if entire additional income is consumed, the value of investment multiplier would be _______. (Fill up the blank with correct alternative.)
Identify, what does the shaded area (ΔEFG), in the given figure indicate ? (A 45°-line diagram with Income on the X-axis and Consumption on the Y-axis, showing the consumption function C = c̄ + bY intersecting the 45° line at E, with the shaded triangle EFG lying between the 45° line and the consumption function to the right of E.) I. Consumption > Income II. Saving = Zero (0) III. Consumption < Income IV. Saving < Zero (0) Alternatives : Marginal Propensity to Save (MPS) is the slope of _______ function. (Choose the correct alternative.) (A) Consumption (B) Cost (C) Saving (D) Investment
Suppose, an economy is in equilibrium. From the following data, calculate investment expenditure in the economy : (a) National Income (Y) = Rs. 10,000 crore (b) Marginal Propensity to Consume (MPC) = 0.8 (c) Autonomous Consumption (c̄) = Rs. 100 crore
In a hypothetical economy, if entire additional income is consumed, the value of investment multiplier would be ______. (Fill up the blank with correct alternative.)
Identify, what does the shaded area (ΔEFG), in the given figure indicate ? (Consumption on Y-axis, Income on X-axis; 45° line Y and consumption function C = c̄ + bY intersecting at E, with points F and G to the right forming the shaded area ΔEFG.) I. Consumption > Income II. Saving = Zero (0) III. Consumption < Income IV. Saving < Zero (0) Alternatives : For Visually Impaired Candidates : Marginal Propensity to Save (MPS) is the slope of ______. (Choose the correct alternative.) (A) Consumption function (B) Cost function (C) Saving function (D) Investment
Suppose an economy is in equilibrium. From the following data, calculate investment expenditure in economy : (i) National Income (Y) = Rs. 10,000 crore (ii) Marginal Propensity to Save (MPS) = 0.2 (iii) Autonomous Consumption (c̄) = Rs. 100 crore
Identify, what does the shaded area (deltaEFG), in the given figure indicate ? (45-degree line diagram with Income on the X-axis and Consumption on the Y-axis, the consumption function C = c_bar + bY cutting the 45-degree line at point E, with the shaded area EFG lying between the 45-degree line and the consumption line beyond E) I. Consumption > Income II. Saving = Zero (0) III. Consumption < Income IV. Saving < Zero (0) Alternatives : Marginal Propensity to Save (MPS) is the slope of ______ function. (Choose the correct alternative.) (A) Consumption (B) Cost (C) Saving (D) Investment
From the following data calculate Investment Multiplier and Equilibrium level Income in the economy. (i) Change in initial investment (deltaI) = Rs. 1,000 crore (ii) Marginal Propensity to Save (MPS) = 0.5 (iii) Autonomous consumption (c_bar) = Rs. 50 crore (iv) Planned investment = Rs. 100 crore
Suppose, the saving curve of an economy makes an intercept at a negative value of Rs. 50 crores. In the economy, 20% of an increase in income is saved. In the light of above context, identify the value of investment multiplier (K).
Suppose, the value of Average Propensity to Consume (APC) is 0.8 and National Income is Rs. 4,000 crores, the value of saving would be Rs. _______ crores. (Choose the correct option to fill up the blank)
In an economy ; C = 200 + 0.75 Y (where C is consumption expenditure and Y is National Income). Investment expenditure is Rs. 4,000 Crore. Calculate the following : (i) Equilibrium level of income. (ii) Total consumption expenditure at equilibrium income level. Explain the adjustment mechanism in case ex-ante savings are greater than ex-ante investments.
Suppose, the value of Average Propensity to Consume (APC) is 0.8 and National Income is Rs. 4,000 crores, the value of saving would be Rs. ______ crores. (Choose the correct option to fill up the blank)
Suppose, the value of Average Propensity to Consume (APC) is 0.8 and National Income is Rs. 4,000 crores, the value of saving would be Rs. ________ crores. (Choose the correct option to fill up the blank)
In the Keynesian Economics, _____ starts from the origin and is always drawn at an angle of 45°. (Choose the correct option to fill up the blank)
Suppose for an economy, autonomous consumption stands as Rs. 100 crore and total consumption is Rs. 130 crores. The value of induced consumption would be Rs. _____ crore. (Choose the correct option to fill up the blank)
Read the following statements : Assertion (A) and Reason (R). Choose one of the correct options given below : Assertion (A) : If the value of Marginal Propensity to Save is 0.5, Marginal Propensity to Consume will be equal to Marginal Propensity to Save. Reason (R) : Sum of Marginal Propensity to Consume and Marginal Propensity to Save always equals to unity.
To arrive at the value of equilibrium level of income, there must exists an equality between ex-ante _____ and ex-ante _____. (Choose the correct option to fill up the blank) (i) Aggregate Demand, Aggregate Supply (ii) Aggregate Demand, Savings (iii) Aggregate Demand, Investment (iv) Savings, Investment
Suppose for an economy, government proposes project for construction of expressways with an incremental investment of Rs. 1200 crore. Assuming, 80% of increase in income is spent on consumption. Estimate the following on the basis of above information : (a) Change in income (ΔY). (b) Change in consumption (ΔC).
Suppose for an economy, government proposes investment projects for construction of expressways with an incremental investment of Rs. 2400 crore. Assuming, 80% of increase in income is spent on consumption. Estimate the following on the basis of above information : (a) Change in income (ΔY). (b) Change in consumption (ΔC).
Suppose for an economy, autonomous consumption stands as Rs. 100 crore and total consumption is Rs. 130 crores. The value of induced consumption would be Rs. ____ crore. (Choose the correct option to fill up the blank)
In the Keynesian Economics, ____ starts from the origin and is always drawn at an angle of 45°. (Choose the correct option to fill up the blank)
To arrive at the value of equilibrium level of income, there must exists an equality between ex-ante ____ and ex-ante ____. (Choose the correct option to fill up the blank) (i) Aggregate Demand, Aggregate Supply (ii) Aggregate Demand, Savings (iii) Aggregate Demand, Investment (iv) Savings, Investment
Suppose for an economy, government proposes two investment projects for construction of expressways with an additional investment of Rs. 2000 crore. Assuming, 80% of increase in income is spent on consumption. Estimate the following on the basis of above information : (a) Change in income (ΔY). (b) Change in consumption (ΔC).
Under the Keynesian theory, 'Reference Line' is a straight line passing through the origin drawn at an angle of __________. (Choose the correct option to fill in the blank)
Read the following statements carefully : Statement 1 : Marginal Propensity to Consume (MPC) refers to the consumption per unit of income. Statement 2 : As the income increases, the proportionate increase in the level of consumption is always more than the increase in the level of income. In the light of the given statements, choose the correct option from the following :
Assuming for a hypothetical economy : (i) Autonomous Consumption Expenditure (c-bar) = Rs. 250 crore (ii) Marginal Propensity to Save (MPS) = 0.2 (iii) Autonomous Investments (I_0) = Rs. 200 crore Estimate the Break-even level of Income and Equilibrium level of Income, on the basis of information given above.
Assuming the following for a hypothetical economy, estimate the Break-even level of Income and Equilibrium level of Income : (i) Autonomous Consumption Expenditure (C̄) = Rs. 50 crore (ii) Marginal Propensity to Save (MPS) = 0.2 (iii) Autonomous Investments (I_0) = Rs. 100 crore
Assuming the following for a hypothetical economy, estimate the level of Break-even Income and Equilibrium Income : (i) Autonomous Consumption Expenditure (c̄) = Rs. 50 crore (ii) Marginal Propensity to Save (MPS) = 0.2 (iii) Autonomous Investments (I_0) = Rs. 300 crore
Under the Keynesian theory, 'Reference Line' is a straight line passing through the origin drawn at an angle of ________. (Choose the correct option to fill in the blank)
Read the following statements carefully : Statement 1 : Marginal Propensity to Consume (MPC) exhibits the consumption per unit of income. Statement 2 : As the national income of a country rises, the proportionate increase in the consumption is always more than the increase in the income. In the light of the given statements, choose the correct option from the following :
Suppose for two imaginary economies A and B, the value of Marginal Propensity to Consume (MPC) stands at 0.8 and 0.6 respectively. For both the economies, Autonomous Consumption (c-bar) = Rs. 400 crore and Investment Expenditure (I) = Rs. 2,000 crore. Calculate the following : (a) Break-even level of income for Economy A. (b) Equilibrium level of income for Economy B.
Suppose for two imaginary economies A and B, the values of Marginal Propensity to Save (MPS) stand at 0.2 and 0.4 respectively. For both the economies, Autonomous Consumption (c̄) = Rs. 400 crore and Investment Expenditure (I) = Rs. 2,000 crore. Calculate the following : (a) Break-even level of income for Economy A. (b) Equilibrium level of income for Economy B.
Suppose for two imaginary economies A and B, the value of Marginal Propensity to Consume (MPC) stands at 0.5 and 0.8 respectively. For both the economies, Autonomous Consumption ( c̄ ) = Rs. 400 crore and Investment Expenditure (I) = Rs. 2,000 crore. Calculate the following : (a) Break-even level of income for Economy A. (b) Equilibrium level of income for Economy B.
If the value of Investment Multiplier (K) is 5, the relevant saving function would be ____________. (Choose the correct option to fill in the blank)
If an upward sloping straight line consumption function makes an intercept at the Y-axis at a positive coordinate, it implies that Marginal Propensity to Consume (MPC) ____________ and Average Propensity to Consume (APC) ____________ as the income increases. (Choose the correct option to fill in the blanks)
Using the given information, complete the following table : (Choose the correct option)
If an upward sloping straight line consumption function makes an intercept at the Y-axis at a positive coordinate, it implies that Marginal Propensity to Consume (MPC) _____________ and Average Propensity to Consume (APC) _____________ as the income increases. (Choose the correct option to fill in the blanks)
If the value of Investment Multiplier (K) is 5, the relevant saving function would be _____________. (Choose the correct option to fill in the blank)
If the value of Investment Multiplier (K) is 5, the relevant saving function would be ___________. (Choose the correct option to fill in the blank)
If an upward sloping straight line consumption function makes an intercept at the Y-axis at a positive coordinate, it implies that Marginal Propensity to Consume (MPC) ___________ and Average Propensity to Consume (APC) ___________ as the income increases. (Choose the correct option to fill in the blanks)
Suppose, the consumption function is given as : C = 205 + 0.9 Y (where C = Total Consumption and Y = National Income) The value of Investment Multiplier (K) would be ____________. (Choose the correct option to fill in the blank)
Marginal Propensity to Consume (MPC) exhibits the slope of _________ function. (Choose the correct option to fill in the blank)
The 45° line in Keynesian economics indicates ___________. (Choose the correct option to fill in the blank)
(i) "In an economy, ex-ante investment (I) exceeds ex-ante savings (S)." Explain the likely impact of the given situation on output, employment and income. (ii) Define excess demand.
The 45° line in Keynesian economics indicates __________. (Choose the correct option to fill in the blank)
Marginal Propensity to Consume (MPC) exhibits the slope of ________ function. (Choose the correct option to fill in the blank)
Suppose, the consumption function is given as : C = 205 + 0.9 Y (where C = Total Consumption and Y = National Income) The value of Investment Multiplier (K) would be ___________. (Choose the correct option to fill in the blank)
Suppose in an economy there exist autonomous investments, which are independent of the level of income. Graphically, the autonomous investments curve would be __________. (Choose the correct alternative to fill in the blank)
In the Keynesian economic analysis, determination of equilibrium income in the short-run is usually expressed as _________. (Choose the correct alternative to fill in the blank) (i) Ex-ante Aggregate Demand = Ex-ante Aggregate Supply (ii) Consumption (C) + Investment (I) = Savings (iii) Consumption (C) + Investment (I) = National Income (iv) Ex-ante Savings = Ex-ante Investments Alternatives :
Read the following statements carefully : Statement 1 : The value of Average Propensity to Save (APS) can be greater than one. Statement 2 : Break-even point is the level at which level of consumption is equal to the income. In the light of the given statements, choose the correct alternative from the following :
From the following statements, identify the incorrect statement in case of underemployment equilibrium. (Choose the correct alternative)
On the basis of the given figure, answer the following questions : (a) Identify AB and CD curves. (b) Briefly discuss the reason for AB curve starting from point A (Y-intercept). (c) State the significance of OY level of income.
Identify, which of the following is true at the Break Even level of Income. (Choose the correct option)
"Income of an economy increased from Rs. 20,000 to Rs. 50,000 crore. Savings of the economy increased from Rs. 2,000 crore to Rs. 10,000 crore." (i) Calculate Average Propensity to Consume (APC) and Average Propensity to Save (APS), before and after the rise in income. 4 (ii) Draw appropriate conclusion regarding the behaviour of Average Propensity to Consume (APC) as his income increases. 2 "Under a study, examining the spending habits of a hypothetical economy, it was observed that even households with zero income managed to consume basic necessities. As the income of people increased, their consumption also increased, but not as rapidly as income." Based on the given text and common understanding, answer the following questions : (i) Identify and elaborate the type of consumption indicated in the first para of the above text. 3 (ii) Explain, the reason behind the positive slope of Aggregate Demand Curve. 3
Income of an economy increased from Rs. 40,000 to Rs. 1,00,000 crore. Savings of the economy increased from Rs. 4,000 crore to Rs. 20,000 crore. (i) Calculate Average Propensity to Consume (APC) and Average Propensity to Save (APS) before and after the rise in income. (ii) Draw appropriate conclusion regarding the behaviour of Average Propensity to Save (APS) as his income increases. "Under a study, examining the spending habits of a hypothetical economy, it was observed that even households with zero income managed to consume basic necessities. As the income of people increased, their consumption also increased, but not as rapidly as income." Based on the given text and common understanding, answer the following questions : (i) Identify and elaborate the type of consumption indicated in the first para of the above text. (ii) Explain, the reason behind the positive slope of Aggregate Demand Curve.
"Under a study, examining the spending habits of a hypothetical economy, it was observed that even households with zero income managed to consume basic necessities. As the income of people increased, their consumption also increased, but not as rapidly as income." Based on the given text and common understanding, answer the following questions : (i) Identify and elaborate the type of consumption indicated in the first para of the above text. (ii) Explain, the reason behind the positive slope of Aggregate Demand Curve. Income of an economy increased from Rs. 50,000 to Rs. 1,00,000 crore. Savings of the economy increased from Rs. 5,000 crore to Rs. 20,000 crore. (i) Calculate Average Propensity to Consume (APC) and Average Propensity to Save (APS) before and after the rise in Income. (ii) Draw appropriate conclusion regarding the behaviour of Average Propensity to Save (APS) as his income increases.
Choose the correct consumption function from the options given below with reference to the illustrated given diagram. If the value of Marginal Propensity to Consume (MPC) is 0.6 and dissavings are 100, the relevant saving function would be : (Choose the correct option)
(I) Estimate the value of subsistence level of consumption expenditure from the following data about an economy which is in equilibrium : (i) National Income (Y) = Rs. 1,200 crore (ii) Marginal Propensity to Save (MPS) = 0.20 (iii) Investment Expenditure ( I ) = Rs. 100 crore (II) "An economy facing an increase in unintended accumulation of inventories would try to reduce Aggregate Demand." Defend or refute the above statement with valid arguments. (I) Complete the following table : (II) Identify the monetary measures being referred to in the following statements. Discuss whether the tool would be used during a situation of excess demand or deficient demand. (i) Selling off government securities (G-Sec) to public by the central bank. (ii) Encourage commercial banks to park their surplus funds with the Reserve Bank of India (RBI).
Choose the correct consumption function from the options given below with reference to the illustrated given diagram.
Choose the correct consumption function from the options given below with reference to the illustrated given diagram. (Graph with Income on the X-axis and Consumption on the Y-axis, showing a 45 degree Income Line and a consumption curve C intersecting at point E; C = 280 at income 200 and C = 700 at income 800.)
(I) Estimate the value of subsistence level of consumption expenditure from the following data, about an economy which is in equilibrium : (i) National Income (Y) = Rs. 1,500 crore (ii) Marginal Propensity to Consume (MPC) = 0.8 (iii) Investment Expenditure (I) = Rs. 150 crore (II) "An economy facing unplanned accumulation of inventories would try to increase its Aggregate Demand." Defend or refute the given statement with valid arguments. (I) Complete the following table : (II) Identify the monetary measure being referred to each of the following and discuss whether the tool would be used during a situation of excess demand or deficient demand. (i) Buying government securities (G-Sec) from public. (ii) Discourage commercial banks to park their surplus funds with the Reserve Bank of India (RBI).
Select the correct formula to calculate the value of Marginal Propensity to Save (MPS) : I. Change in Savings (ΔS) / Change in Consumption (ΔC) II. Change in Savings (ΔS) / Change in Income (ΔY) III. 1 – Marginal Propensity to Consume (MPC) IV. Change in Income (ΔY) / Change in Savings (ΔS)
Suppose in a hypothetical economy, Y = 50 + 0.8Y + 100, where Y = National Income. The value of Investment Multiplier (K) would be ___________. (Choose the correct option to fill in the blank)
Read the following statements carefully : Statement I : At the break-even level of income, the value of slope of the consumption curve is zero. Statement II : Marginal Propensity to Consume (MPC) refers to the change in consumption per unit change in income. In the light of the given statements, choose the correct option from the following :
Estimate the value of incremental investment if, equilibrium level of income increases by Rs. 50,000 crore and half of additional income is always saved in the economy.
Select the correct formula to calculate the value of Marginal Propensity to Save (MPS) : I. Change in Savings (delta S) / Change in Consumption (delta C) II. Change in Savings (delta S) / Change in Income (delta Y) III. 1 - Marginal Propensity to Consume (MPC) IV. Change in Income (delta Y) / Change in Savings (delta S)
Assuming for an imaginary economy, consumption at zero level of income and break-even level of income is Rs. 50 and Rs. 200 respectively. Choose the correct value of Marginal Propensity to Consume (MPC), from the following :
Investment is defined as addition to the ___________ . (i) Stock of physical capital (ii) Changes in the inventory (iii) Consumption (Choose the correct option to fill in the blank)
Explain the adjustment mechanism, if in an economy, ex-ante Savings are more than ex-ante Investments. Explain the process of working of Investment Multiplier, for a hypothetical economy with Marginal Propensity to Consume (MPC) as 0.8 and Incremental Investment as Rs. 3,000 crore.
With reference to the given diagram, OL indicates ___________ . (Diagram: Y-axis 'Consumption, Investments', X-axis 'Level of Income', with lines AD, C = C-bar + MPC (Y), I, and points L, J, M marked on the Y-axis.) (Choose the correct option to fill in the blank) (i) Autonomous Consumption (ii) Autonomous Investment (iii) Induced Consumption (iv) Induced Investment
Assume, for a hypothetical economy, the following data is given : (i) Calculate the missing values in the given schedule. (ii) Define the term 'Effective Demand'. (iii) On the basis of the given data, it can be said that the equilibrium level of income is 200. Do you agree ? If not, explain the adjustment mechanism that may take place to attain equilibrium level of income. Suppose, in an economy, every Rs. 1 increase in investment expenditure leads to an increase of Rs. 4 in the National Income. Calculate the following : (i) Value of Investment Multiplier (K). (ii) Change in consumption expenditure, if the income changes from Rs. 400 to Rs. 500. (iii) "Sum of Marginal Propensity to Consume (MPC) and Marginal Propensity to Save (MPS) is always equal to one." Justify the given statement with the help of a suitable argument.
With reference to the given diagram, OL indicates ___________ . (Diagram: Y-axis 'Consumption, Investments', X-axis 'Level of Income'; upward sloping AD line, consumption line C = C-bar + MPC (Y), horizontal investment line I; points L, J, M marked on the Y-axis with origin O.) (Choose the correct option to fill in the blank) (i) Autonomous Consumption (ii) Autonomous Investment (iii) Induced Consumption (iv) Induced Investment
Assuming for a hypothetical economy, the following data is given : (i) Calculate the missing values in the given schedule. (ii) Define the term 'Effective Demand'. (iii) On the basis of the given data, it can be said that the equilibrium level of income is 300. Do you agree ? If not, explain the adjustment mechanism that may take place to attain equilibrium level of income. Suppose in an economy, every Rs. 1 increase in investment expenditure leads to an increase of Rs. 5 in the National Income. Calculate the following : (i) Value of Investment Multiplier (K). (ii) Change in consumption expenditure, if income changes from Rs. 300 to Rs. 400. (iii) "Sum of Average Propensity to Consume (APC) and Average Propensity to Save (APS) is always equal to one." Justify the given statement with the help of a suitable argument.
With reference to the given diagram, OL indicates ___________ . (Choose the correct option to fill in the blank) (i) Autonomous Consumption (ii) Autonomous Investment (iii) Induced Consumption (iv) Induced Investment
Assuming for a hypothetical economy, the following data is given : (i) Calculate the missing values in the given schedule. (ii) Define the term 'Effective Demand'. (iii) On the basis of the given data, it can be said that the equilibrium level of income is 200. Do you agree ? If not, explain the adjustment mechanism that may take place to attain equilibrium level of income. Suppose in an economy, every Rs. 2 increase in investment expenditure leads to an increase of Rs. 8 in the National Income. Calculate the following : (i) Value of Investment Multiplier (K). (ii) Change in consumption expenditure, if income changes from Rs. 200 to Rs. 300. (iii) "Sum of Average Propensity to Consume (APC) and Average Propensity to Save (APS) is always equal to one." Justify the given statement with the help of a suitable argument.
From the given table, identify that level of income, where Average Propensity to Save (APS) becomes zero : (Choose the correct alternative.) Alternatives : Income (Rs. crore) | 0 | 50 | 100 | 200 | 300 | 400 Consumption (Rs. crore) | 50 | 75 | 100 | 150 | 200 | 250
From the given table, identify that level of income, where Average Propensity to Save (APS) becomes Zero. (Choose the correct alternative.) Income (Rs. crore) | 0 | 50 | 100 | 200 | 300 | 400 Consumption (Rs. crore) | 50 | 75 | 100 | 150 | 200 | 250
Using the given information, complete the following table : (Choose the correct option) Income (Y) (in Rs. crore) | Savings (in Rs. crore) | Consumption (in Rs. crore) | Average Propensity to Consume (APC) 0 | ...(i)... | 30 | – 100 | 0 | ...(ii)... | 1 200 | 30 | 170 | 0.85 300 | 60 | 240 | 0.8