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NextQ73

(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.

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Question 72

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 :

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