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Match List-I with List-II

List-IList-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

✅ Correct Option: 4

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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