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Concept of Saving

The average p...

Question

The average propensity to consume or APC represents the ratio of total consumption to total income.

A

False

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B

True

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Solution

The correct option is B True

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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. If national income is Rs. 90 crore and Consumption expenditure Rs. 81 crore, find out average propensity to save. When income rises tot 100 crore and consumption expenditure to Rs. 88 crore. What will be the marginal propensity to consume and marginal propensity to save?

Q. Find MPC (Marginal Propensity to Consume) and APC(Average Propensity to Consume) if the expenditure

E_{c}

of a person with income

I

E_{c} = (0.0003) I^{2} + (0.075) I

I = 1000

Q. Calculate Marginal Propensity to consume from the following:
(i) Consumption expenditure at zero income Rs. 70
(ii) Equilibrium income Rs.700
(iii) Investment Rs. 140
(Marginal Propensity to Consume = 0.7)

Q. Find consumption expenditure from the following: Autonomous consumption = Rs. 100; Marginal propensity to consume = 0.70; National Income = 1,000.

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