Macro

Income & Employment

Medium

Assume that in an economy increased consumption is equal to increased saving, how many times will the national income increase in such an economy with an increase in investment?

2 times.

3 times.

4 times.

1 times.

✅ Correct Option: 1

If increased consumption equals increased saving, then MPC = MPS = 0.5. Multiplier $k = \frac{1}{MPS} = \frac{1}{0.5} = 2$ . So national income increases 2 times the increase in investment.

2022: 15 July Shift 2

Suppose a TV manufacturing unit wants to raise its inventories from 1000 units to 2000 units during the year. Expecting sale of 5000 units during the year, the firm produces 5000+1000= 6000 TV sets. Actual sale for the firm are 5000 TV sets during the year.

This is an example of:

2023: 11 June Shift 3

The shape of investment function when I is autonomous curve is represented through :

2025: 13 May Shift 2

Match List-I with List-II

List-I	List-II
(A) Marginal propensity to consume	(I) Change in savings per unit change in income.
(B) Marginal propensity to save	(II) Savings per unit of income.
(C) Average propensity to consume	(III) Change in consumption per unit change in income.
(D) Average propensity to save	(IV) Consumption per unit of income.

Choose the correct answer from the options given below:

2025: 29 May Shift 1

If Multiplier is 2.5,how much investment will be required to generate additional income of 1000 crores?

2023: 29 May Shift 2

If C= X+0.6Y & Investment is Rs 1,500 Equilibrium level of income in economy would be 4050, find out the autonomous consumption.

2025: 3 June Shift 2

When autonomous investment increases, the aggregate demand curve shifts?

Assume that in an economy increased consumption is equal to increased saving, how many times will the national income increase in such an economy with an increase in investment?

Solution

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