Given that national income is र 80 crore and consumption expenditure is 64 crore. Find out average propensity to save (APS). When income rises to र 100 crore and consumption expenditure to र 78 crore, what will be APC and MPC?

Solution

(i) $APS space equals space straight S over straight Y space equals space fraction numerator 16 left parenthesis space equals space 80 space minus space 64 right parenthesis over denominator 80 end fraction space equals space 1 fifth space equals space 0.2$
(ii) When income rises to 100 crores and consumption expenditure to 78 crore, then ΔY = 20(=100 – 80) and ΔC = 16(=78 - 64).
$APC space equals space straight C over straight Y space equals space 78 over 100 space equals space 0.78 MPC space equals space fraction numerator increment straight C over denominator increment straight Y end fraction space equals space 16 over 20 space equals space 4 over 5 space equals space 0.8$

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Determination Of Income And Employment

Given that national income is र 80 crore and consumption expenditure is 64 crore. Find out average propensity to save (APS). When income rises to र 100 crore and consumption expenditure to र 78 crore, what will be APC and MPC?

Some More Questions From Determination of Income and Employment Chapter

Explain the meaning of aggregate supply (AS).

Calculate consumption level for Y = र 1000 crores if consumption function is C = 300 + 0.5Y.

State relationship between income and consumption.

What is Breakeven point?

What are the types of Propensity to consume?

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