In an economy, every time the National Income rises 20% of the rises in income is saved by households. Now suppose there is a rise in investment by 100 crores, then the National Income in this economy will rise by : Option 1: 125 crores Option 2: 500 crores Option 3: 2000 crores Option 4: 20 crores

Answer: 500 crores. Solution: MPS = 0.2, so investment multiplier k = 1/MPS = 1/0.2 = 5. Change in National Income = k x I = 5 x 100 = 500 crores.

Macro

Income & Employment

Easy

In an economy, every time the National Income rises 20% of the rises in income is saved by households. Now suppose there is a rise in investment by $\overline{\mathbf{\tau}}$ 100 crores, then the National Income in this economy will rise by :

$\overline{\mathbf{\tau}}$ 125 crores

$\overline{\mathbf{\tau}}$ 500 crores

$\overline{\mathbf{\tau}}$ 2000 crores

$\overline{\mathbf{\tau}}$ 20 crores

✅ Correct Option: 2

MPS = 0.2, so investment multiplier $k = \frac{1}{MPS} = \frac{1}{0.2} = 5$ . Change in National Income = $k \times \Delta I = 5 \times 100 = 500$ crores.

2025: 16 May Shift 1

Which of the following are components of aggregate demand?

(A) Autonomous Investment

(B) Autonomous Consumption

(D) Induced consumption

Choose the correct answer from the options given below:

2025: 15 May Shift 1

The investment multiplier is equal to which of the following?

2026: 13 May Shift 2

The ex-ante term refers to ?

2025: 2 June Shift 1

When income is more than consumption, then value of Average Propensity to Save (APS) is.

2025: 28 May Shift 2

Determination of income and employment of a two-sector model is done by:

(A) Ex-ante aggregate demand for final goods.

(B) Ex-post aggregate demand for final goods.

(D) Constant rate of interest.

Choose the correct answer from the options given below:

2025: 28 May Shift 1

Match List-I with List-II

List-I	List-II
A. MPS	I. Saving Per unit of Income.
B. MPC	II. Consumption per unit of Income
C. APS	III. Change in consumption per unit change in income.
D. APC	IV. Change in savings per unit change in income.

Choose the correct answer from the options given below:

(A) - (I), (B) - (II), (C) - (III), (D) - (IV)
(A) - (I), (B) - (III), (C) - (II), (D) - (IV)
(A) - (IV), (B) - (III), (C) - (I), (D) - (II)
(A) - (III), (B) - (IV), (C) - (I), (D) - (II)

In an economy, every time the National Income rises 20% of the rises in income is saved by households. Now suppose there is a rise in investment by τ‾\overline{\mathbf{\tau}}τ 100 crores, then the National Income in this economy will rise by :

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CUET Economics Past Year Questions (Topic-Wise)

In an economy, every time the National Income rises 20% of the rises in income is saved by households. Now suppose there is a rise in investment by $\overline{\mathbf{\tau}}$ 100 crores, then the National Income in this economy will rise by :