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Treatment in Partner's Capital Account-Change in PSR

At income lev...

Question

At income level of Rs. 5,000 crores, total saving is Rs. 1,000 crores. Calculate APC.

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Solution

Income= 5,000 crore rupees and total savings= 1,000 crore rupees.
Consumption = Income- Savings
= 5,000-1,000
= 4,000 crore rupees
Average propensity to consume= Consumption/Income= 4,000/5,000= 4/5

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Q. The following table Illustrates the multiplier process after making an additional investment of Rs. 1,000 crores. Calculate the missing values.

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Second Round	?	640	?
Third Round	?	?	?
All other Rounds	?	?	?
Total	?	?	?

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((i) MPC = 0.8; MPS =0.2; (ii) Autnomous Consumption = 1200 crows (iii) S = -200 + 0.20Y (iv) Rs. 2,600 crams and Rs. 4,200 crores; (v) Rs. 1,000 crores)

If personal disposable income is Rs. 1,000 crores and the consumption expenditure is Rs. 750 crores, calculate the average propensity to save.

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