MyQuestionIcon

1

You visited us 1 times! Enjoying our articles? Unlock Full Access!

Ratios and OMO

If the intere...

Question

If the interest rate is decreased in an economy, it will ________________.

A

decrease the consumption expenditure in the economy

No worries! We‘ve got your back. Try BYJU‘S free classes today!

B

increase in the tax collection of the Government

No worries! We‘ve got your back. Try BYJU‘S free classes today!

C

increase in the investment expenditure in the economy

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

D

increase in the total savings in the economy

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is D increase in the investment expenditure in the economy
Interest rate cut makes investment (borrowing) cheaper which makes 'investment expenditure' in the economy go upward.

Suggest Corrections

thumbs-up

0

Similar questions

Q. Calculate consumption expenditure in the economy whose equilibrium level of income is 20,000, autonomous consumption is 500 and marginal propensity to save is 0.5.
(Consumption Expenditure a 10.500)

Q. In an economy, the marginal propensity to save is 0.25. Investment is increased by Rs. 200 crores. Calculate the total increase in income and consumption expenditure.

Q. An economy is in equilibrium. From the following data. calculate the marginal propensity to save :
(a) Income

= 10, 000

(b) Autonomous consumption

= 500

(c) Consumption expenditure

= 8, 000

Q. In an economy, the investment expenditure is increased by Rs. 2,000 crores. Calculate the total increase in income and consumption expenditure if ratio of marginal propensity to consume and marginal propensity to save is 4:1.
(Increase in income = Rs. 10,000 cores; Increase in Consumption Expenditure = Rs. 8,000 mores)

Q. An economy is in equilibrium. From the following data about an economy, calculate autonomous consumption.
Income = 5,000
Marginal Propensity to Save = 0.2
Investment Expenditure = 800
(Autonomous Consumption = 200)

View More

Join BYJU'S Learning Program

similar_icon

Related Videos

lock

Ratios and OMO

ECONOMICS

Watch in App

explore_more_icon

Explore more

Standard XII Economics

Join BYJU'S Learning Program

CrossIcon