Match List-I with List-II
List-I List-II (A). Marginal propensity to consume (MPC) (I). C/ Y (B). Consumption function (II). C + I (C). Average propensity to consume (APC) (III). ΔC/ ΔY (D). Aggregate Demand (IV). C = c + cY
Choose the correct answer from the options given below:
Match List-I with List-II
| List-I | List-II |
|---|---|
| (A). Marginal propensity to consume (MPC) | (I). C/ Y |
| (B). Consumption function | (II). C + I |
| (C). Average propensity to consume (APC) | (III). ΔC/ ΔY |
| (D). Aggregate Demand | (IV). C = c + cY |
Choose the correct answer from the options given below:
Solution
Option 4: (A) - (III), (B) - (IV), (C) - (I), (D) - (II) -> This is the correct matching. (A) Marginal propensity to consume (MPC) is defined as the change in consumption divided by the change in income (ΔC/ΔY), which measures how much additional consumption occurs when income increases by one unit. (B) Consumption function is represented by the equation C = c + cY, where c is autonomous consumption and cY is induced consumption based on income. (C) Average propensity to consume (APC) is the ratio of total consumption to total income (C/Y), showing the proportion of income spent on consumption. (D) Aggregate Demand in a simple two-sector economy is the sum of consumption and investment expenditure (C + I). -> correct
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