Related InterviewSolutions

• Measure the level ex-ante aggregate demand when autonomous investment and consumption expenditure(A) is rupee50 crore, and MPS is 0.2 and level of income(Y) is ruppe 4000crores. State whether the economy is in equilibrium or not (cite reason) Hint: The aggregate demand (AD) function is given as AD=A+b(y) Given A=50, b or MPC=1-MPS =1-0.2=0.85 Putting the values A and b in AD function we get AD=50+0.8`xx4000`=3250crores Economy is not at equillibrium as AD of 3250crores is less than Y (or AS) of 4000 crores,
• In an economy , income increases by 10,000 as a result of a rise in investment expenditure by 1,000. Calculate: (a) Investment Multiplier, (b) Marginal Propensity to Consume.
• If marginal propensity to consume is 0.9, what is the value of multiplier ? How much investment is needed, if national increases by Rs. 5,000 crores?
• In an economy 75 percent of the increase in income is spent on consumption. Investment is increased by Rs.1,000 crores. Calculate: (a) total increase in income , (b) total increase in consumption expenditure.
• Calculate the value of multiplier if the entire increases in income is saved.
• The saving function of an economy is given as, S=-50+0.4. The economy is in equilibrium at the income level of 1500 crores. Calculate (a) Investment at equilibrium income level. (b) Autonomous consumption: (c ) Multiplier.
• Suppose investment in the economy is fixed at Rs.40 crores. The consumption expenditure, at different levels of income , is given in the following schedule: `{:("Income"(Rs."crores"),200,300,400,500,600,700),("Consumption"(Rs."crose"),220,300,380,460,540,620):}` On the basis of the given schedule, answer the following questions: (i) Calculate AD and AS all level of income. (ii) At what level of income will the economy be at equilibrium? (iii)State the level if income where total saving is negative. (iv) Are saving and investment equal at the equilibrium level of income? (v) Calculate MPC and MPS ,when the incme increases from Rs. 400 crores to Rs. 500 crores. (vi) What will be the income level of Rs. 300 crores?
• If consumption function for economy is given as: C=120+0.9Y then what is the value of multiplier?
• In an economy S= - 50+50Y is the saving function and investment expenditure is ₹ 7000. Calculate : (i) Equilibrium level of income (ii) Consumption expenditure at equilibrium level of national income.
• If saving function for an economy is given as : S `= - 500 + 0.2Y` and investment expenditure is Rs. 100 crores, then determine: ("i) Level of income when saving will become zero, (ii) Level of income when saving is equal to investment .